A regional headquarter tax incentive regime could allow Hong Kong to join other key locations in the Asia Pacific region that have been successful in attracting multinational corporations (MNCs) and their regional headquarters.
While Hong Kong is a leading international financial centre and regional business hub, Singapore has historically been seen as the clear leader in the Asia Pacific region as a regional headquarter hub. Hong Kong currently does not have a regional headquarter tax incentive regime. Accordingly, profits of a Hong Kong regional headquarter generally are subject to profits tax at a rate of 16.5%, whereas the tax rate under the regional headquarter tax incentive in Singapore typically ranges between 5% to 10% on eligible profits.
If Hong Kong were to offer a tax incentive regime for regional headquarters, advocates believe this could contribute to the growth and development of Hong Kong’s economy, in part, due to the resulting increased demand for goods and services and employment of local personnel. A report prepared by KPMG asserts that in order for Hong Kong to be a competitive and viable alternative to other locations with longstanding regional headquarter tax incentives, Hong Kong needs to consider introducing its own version of a tax incentive in order to encourage MNCs to establish regional headquarters in Hong Kong.
Read an October 2017 report prepared by the KPMG member firm in Hong Kong
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