Hong Kong will be ‘more competitive’ after tax deal

The SAR government said on Saturday that the SAR would become a more competitive place to do business thanks to a new global tax deal announced by the Organisation for Economic Cooperation and Development.

The tax agreement is designed to ensure that big companies pay a minimum tax rate of 15 percent, and follows years of criticism that big multinationals didn’t pay their fair share.

In a statement, the government said, as an international financial and commercial centre, Hong Kong would implement the package which makes it harder for corporations to avoid taxation.

The administration said Hong Kong – which has a 16.5 percent headline profit tax rate – can reinforce its advantages under the more level playing field as a result of the agreement.

It said it would consult a dedicated advisory panel and stakeholders, and would undertake a legislative exercise to implement the tax measures based on rules to be finalised by the OECD by early next year.

The agreement, which would cover 90 percent of the global economy, will set a minimum corporate tax rate of 15 percent and would allow governments to tax a greater share of foreign multinationals’ profits.

The deal would also see taxing rights on more than US$125 billion of profit being shifted to countries where big multinationals earn their income.

The Hong Kong government stressed that the arrangement would not affect small and medium-sized enterprises here.