Hong Kong wants more corporate treasurers in its city borders. Reports on Friday (June 10) said Hong Kong legislation came into effect earlier this month as the city looks to establish itself as a corporate treasury hub, especially for mainland China's companies.
The Hong Kong Inland Revenue Amendment No. 4 Bill 2015 came into effect to attract Chinese and multinational corporations that want to establish a corporate treasury center in the city. To do so, Hong Kong officials provide tax incentives to the enterprise, reports said.
Reports added that Hong Kong is looking to compete with Singapore, which also has a corporate-friendly tax system to attract multinational corporations.
Companies that establish a treasury hub in Hong Kong receive a 50 percent cut to their profits tax, from 16.5 percent to 8.25 percent, reports said. Still, it could take some time before the corporate treasurers trickle in.
Howard Yang, country head of Hong Kong for Citi's treasury and trade solutions, told South China Morning Post that it could be five years before Hong Kong catches up to Singapore.
"In the early stages of corporate treasury center developments, the Singapore government was a lot more proactive in pushing for encouraging policies," he explained. "In tax, staffing, policy stability matters, the overall competitiveness of Hong Kong was otherwise similar to Singapore. Most corporates, at that point, chose Singapore."
According to Yang, top corporate clients of Citi are now looking at Hong Kong to set up cash management hubs as they look to strengthen ties with local banks.