HK cuts tax to boost free trade

Hong Kong is planning to reduce income and corporate taxes to15% and 16.5% respectively in 2008 or 2009, so as to stabilize its longstanding position as an Asian financial center, chief executive Donald Tsang said in his annual policy address on Wednesday.

The implementation is expected to attract more financial service companies and technology enterprises, thereby closing the margin with Singapore, as the country's top income tax rate is currently at 20%. The two countries have been battling with each other for the next largest international financial center after Tokyo, since the late 1960s.

Tsang added that there will be approximately ten major ongoing infrastructure projects in the next five years, which is supposed to add another HK$100 billion to Hong Kong's annual business. One of the projects includes the proposal of building an expressway linking Hong Kong to cities in Southern China, such as Guangzhou and Shenzhen. In the meantime, the Chinese government has settled financial arrangements for a bridge linking Zhuhai city with Hong Kong and Macau. Both projects will enhance the business relationship with mainland China, one of the world's largest and fastest growing markets.

With the influence of globalization, Hong Kong has successfully invited multinational corporations to set up their operational headquarters for fund and risk management, as well as other financial operations.