Nansha development zone in Guangzhou eyes Hong Kong tax rate

Key zone uses city as model after already adopting its laws on arbitration

PUBLISHED : Saturday, 22 December, 2012, 12:00am
UPDATED : Saturday, 22 December, 2012, 3:37am

First it adopted Hong Kong law in arbitration cases, now the Nansha development zone in Guangzhou wants to set its income tax at the same lower level.

Raymond Sun Lei, deputy chief of Nansha's district government, was speaking to a delegation of Hong Kong reporters on Wednesday when he revealed that the district had applied for such an initiative.

But it has still to be confirmed and approved by the provincial and central governments.

Most Hong Kong taxpayers pay no more than a 15 per cent salaries tax, but Hongkongers who work on the mainland for more than 183 days in a 12-month period pay individual income tax at a rate of up to 45 per cent.

Sun said this could change as Nansha strives to develop into a "new Guangzhou and new Hong Kong", learning from the experience of both cities.

"We chose Hong Kong to be the [model] of our individual income tax's design, and the policy is under consideration and formulation. We are trying to obtain the central government's approval before it can be implemented ... [and I hope] it will provide convenience for Hong Kong and Macau enterprises to develop and set up businesses here."

The Nansha New Area development zone is being built on a platform of co-operation with Hong Kong. Sixty square kilometres of Nansha have been earmarked for development under a closer economic partnership arrangement.

Ideas put forward to develop the area include turning it into a financial centre in which Hong Kong banks could be invited to establish regional headquarters, and building a film and television production base to help support Nansha's tourism industry.

The Qianhai special zone in Shenzhen has already proposed similar tax cuts to attract Hong Kong investors.

To ease worries about legal differences between Hong Kong and the mainland, Nansha set up an international arbitration centre in October, in which Hong Kong arbitrators could serve and mediate between firms.

"We encourage the use of Hong Kong law in arbitration," Sun said. "And some new contracts signed between enterprises here have already included the arbitration clauses, with reference to Hong Kong law."

The centre has not received any cases yet. According to China's 12th five-year plan, Nansha will develop into a commercial and service hub that serves both the mainland and Hong Kong. It is also a pilot development zone for co-operation between Guangdong and Hong Kong.

Qianhai in Shenzhen and Hengqin in Zhuhai were also written into the plan for 2011 to 2015 as testing grounds for new free-trade-zone concepts.