HK losing Asia headquarter hub position

Singapore's flexible policies on taxes, tailor-made incentives attract MNCs

Hong Kong is losing its competitive edge against Singapore as a regional headquarter hub in Asia, accounting body CPA Australia cautioned, citing the Singapore government's taxation policy flexibility as a facilitating factor for attracting overseas investment to the city-state.

According to the Hong Kong Tax Survey conducted by CPA Australia, 59 percent of the respondents said that they preferred to choose Singapore as their corporate regional headquarters. Their Singapore choice was 37 percentage points higher over Hong Kong as their corporate regional headquarters.

The survey further cited high rental costs (31 percent), high living costs (19 percent) and pollution (18 percent) as the top three barriers for companies establishing their headquarters in Hong Kong.

The survey, which was conducted from Oct 6 to Oct 30, involved interviews with 254 senior accountants and financial professionals based in Hong Kong.

"The Singaporean government is more flexible in attracting multinational investment. It tailor-makes different tax incentive policies to attract different multinationals to establish their headquarters in the city-state, providing these multinationals can promise to hire a certain number of people or fulfill other business criteria determined by the Singaporean government," CPA Australia Taxation Committee Member Anthony Lau said on Tuesday at a news conference.

"Hong Kong government lacks this taxation policy flexibility compared to Singapore," Lau added. "Singapore has already slashed its corporate tax rate drastically so that Hong Kong can no longer leverage on its low tax rates to attract overseas investment. Therefore this kind of taxation policy flexibility will be more important in the future."

Loretta Shuen, CPA Australia Taxation Committee Chairperson, recommended that the Hong Kong government should make two initiatives in the taxation system to attract multinational investment to Hong Kong.

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