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Publications and Press Releases :
Press Release
: News Archives
Government welcomes Macao's modification of offshore
institution regime
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The Hong Kong Special Administrative
Region Government has welcomed the announcement on Monday (June
13) by the Macao Special Administrative Region Government on the
modification of its Offshore Institution Regime.
"We welcome the modification of the Offshore Institution Regime
by the Macao SAR Government," a government spokesman said.
"We think that the modification is to cope with Macao's recent
developments. It is conducive to co-ordinating a balanced development
in the Greater Pearl River Delta and to eliminating the imbalanced
tax competition within the region."
The spokesman pointed out that Hong Kong practised a territorial
basis of taxation, in that only profits arising in or derived from
Hong Kong from a trade, profession or business carried on in Hong
Kong were chargeable to profits tax. As for the tax avoidance arrangements
that make use of overseas companies, the Inland Revenue Department
is constantly on the lookout for improper transactions resulting
in possible loss of revenue to Hong Kong. There are anti-avoidance
provisions in the Inland Revenue Ordinance and well-established
procedures for assessing whether Hong Kong companies have siphoned
off profits improperly to offshore affiliates, as well as clear
stipulations on the penalties for such offence.
The spokesman said the Hong Kong SAR Government would soon begin
discussion with the Macao SAR Government on a comprehensive double
taxation agreement and it was hoped the agreement could be finalised
as soon as possible. Clauses will be added in the agreement to facilitate
the exchange of relevant tax information between the two SAR governments
so that the tax enforcement authorities can combat tax avoidance
activities more effectively.
The Macao Offshore Institution Regime was introduced by the former
Macao Government in 1999, reflecting the then economic conditions,
before the Macao SAR Government was established. The purpose of
the regime was to help develop Macao into an offshore commercial
centre. Concessions that are available under the scheme include
the exemption of profits tax, business tax and stamp duty on purchase
of offices by offshore institutions; and the exemption to professional
tax (equivalent to salaries tax of Hong Kong) on the offshore institution's
non-Macao resident managers and specialised technicians for the
first three years.
Qualifying offshore institutions must pursue the offshore activities
indicated in a table approved by a decision of the Chief Executive
of the Macao SAR Government. Effective from June 14, 2005, (the
day after the Administrative Order was published), the scope of
the approved offshore activities is restricted from the original
20 items to eight items, which are mainly technical support activities.
Ends/Wednesday, June 15, 2005
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