Praise from asset management industry for John Tsang's budget help

There was a lot of talk about boosting competitiveness in yesterday's budget speech, but there was little to announce in terms of concrete fiscal measures.

Instead, Financial Secretary John Tsang Chun-wah used the speech to outline important ways in which the government is promoting business through policy initiatives with the mainland. These have been particularly beneficial to the asset management industry.

Tsang announced that a task force would be set up to look at tax deductions for corporate treasury activities. Tax experts said that was aimed at lowering or eliminating taxes on loans between international firms and their Hong Kong subsidiaries, and enticing corporations to make the city their regional financial headquarters.

At the moment, interest paid on loans from an offshore division of a multinational firm to its Hong Kong office is not tax deductible. "Hopefully this can attract more overseas entities to set up treasury function in Hong Kong and attract more headquarters," said Tracy Ho, tax managing partner at Ernst & Young.

Tsang also offered some concessions for the asset management industry. At the end of 2012, he said, assets overseen in Hong Kong's wealth and asset management industries topped HK$12.6 trillion, 40 per cent up on the previous year.

Tsang also announced a waiver of stamp duty on exchange-traded funds (ETFs) would be extended to cover all 117 ETFs.

Christopher Cheung Wah-fung, who represents the financial services sector in Legco, said this was unfair as stock traders still needed to pay stamp duty.