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Local staff of International Finance Corporation
exempted from salaries tax
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The Exemption from Salaries Tax (International Finance Corporation)
Order was published in the Gazette today (June 1).
The Order, made by the Chief Executive
in Council, seeks to exempt any Chinese national or Hong Kong permanent
resident who is employed by or holding an office in the International
Finance Corporation (IFC) from payment of salaries tax chargeable
under section 8 of the Inland Revenue Ordinance (Cap.112).
IFC was set up in 1956 to promote
sustainable private sector development in developing countries by
promoting development of capital markets and productive enterprises.
It is one of the member institutions of the World Bank Group.
Since the opening of its Hong Kong
office in September 2000, IFC has been requesting salaries tax exemption
for local staff working in the office. At present, local staff of
almost all IFC's offices in other jurisdictions are granted tax
exemption. IFC's non-local staff in Hong Kong also enjoy salaries
tax exemption in accordance with the relevant international convention
and IFC's Articles of Agreement.
IFC earlier indicated that
it was considering combining the regional functions of its Asian
offices and locating the combined Asia hub in Hong Kong or other
cities in Asia. It further indicated that the granting of salaries
tax exemption for its local staff would be of critical importance
to its continued presence in Hong Kong.
The Administration has taken into
account relevant factors in considering IFC's request for salaries
tax exemption. Firstly, IFC's continued presence and expansion would
bring benefits to Hong Kong. IFC's mission is to promote private
sector investment in developing countries. It has also been playing
a catalytic role in promoting bond market development in the region.
Its presence here will be a vote of confidence in Hong Kong's political
and economic stability and an endorsement of its status as an international
financial centre.
Secondly, the granting of salaries
tax exemption to IFC's local staff in Hong Kong is generally in
line with international practice. IFC currently has offices in 62
countries and almost all hosting jurisdictions have granted tax
exemption to IFC's local staff.
Thirdly, the granting of salaries
tax exemption would facilitate IFC's recruitment of both Mainland
Chinese and Hong Kong permanent residents to work in the Hong Kong
office. This would encourage more Chinese nationals and Hong Kong
permanent residents to take up the professional and senior management
positions at the Hong Kong office and gain greater prominence in
the World Bank Group.
The accession to IFC's request would
help induce IFC to retain and expand its office in Hong Kong. Given
the importance of IFC in the international arena, its presence would
help uphold the image of Hong Kong as an international financial
centre and also bring about increased financial activities to the
benefit of the Hong Kong economy.
Ends/Friday, June 1, 2007
Issued at HKT 16:01
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