As the Brexit storm continue to blow across the UK, tossing its political and financial institutions into turmoil, the country’s chancellor of the exchequer has attempted to pour some oil on troubled waters. His efforts could benefit Hong Kong or damage its interests.
UK chancellor George Osborne told the Financial Times he is planning to cut corporation tax to be low 15% to lure investors to a Britain outside the European Union. In doing so he would be joining a number of jurisdictions with low tax regimes including Ireland, which currently charges corporation tax at a rate of 12.5%.
In Hong Kong corporate profits tax is charged at 16.5%. Hong Kong does offer tax exemptions for profits derived from operating ships in Hong Kong and for offshore funds. But no such exemptions exist for many of the companies in the territory that provide goods and services for the shipping industry. They may well now feel that, relatively speaking Hong Kong is no longer the nearly-tax haven it advertises itself as .
On the brighter side Mr Osborne recommended greater investment in China, and in doing so he is offering Hong Kong a unique opportunity to broker and nurture the investments that look set to follow.
Mr Osborne did not reveal a time frame for the latest initiatives except to say that Britain must “get on with it”.