HONGKONG will retain its edge as the cheapest place for an Asia-Pacific headquarters, even after Singapore brings in proposed sweeping tax changes next year, according to tax specialists in the territory. Ernst and Young chairman of tax services Marshall Byers said: ''Probably in 90 per cent of the cases I come across Hongkong has the edge both as a business environment and on a cost basis.'' Tax specialists said the territory's 17.5 per cent corporate tax - which was not expected to rise over the next few years - combined with a 15 per cent individual rate meant that for most employers, Hongkong would still be the better bet. Singapore is to introduce a three per cent goods and services tax (GST) next year, accompanying the move with cuts in corporate and personal income taxes. Singapore now has a corporate tax rate of 30 per cent and a top income tax rate of 33 per cent. Companies with an annual turnover of less than S$1 million (about HK$4.7 million) would not levy the GST, an exemption which includes 79 per cent of businesses. Mr Jefferson Vanderwolk, a lecturer at the University of Hongkong's department of professional legal education, said: ''I think the general income rate will still be more than Hongkong's, because I cannot believe they would lower the corporate rate to below 17.5 per cent. ''Plus, Hongkong has a territorial system that income sourced outside Hongkong is not taxed here, even if remitted here, whereas Singapore taxes on a remittance basis.'' While the nature of a business, as well as its geographical focus, would to a large extent determine the site of an Asia-Pacific headquarters, tax specialists said the Hongkong system of only taking a cut of profits sourced in the territory was a major point in its favour. Mr Byers said that as manufacturing was becoming less of a growth area in both Hongkong and Singapore - with factories moving to China, Malaysia and Indonesia - both territories were striving to become financial services centres, and that while tax was often a secondary issue in considerations, Hongkong usually held the edge. Singapore's preferential tax rates on operational headquarters are restrictive and seldom taken up, while Hongkong is very cheap on the tax front thanks to almost miniscule tax - 17.5 per cent of five per cent, or 0.875 per cent - for operating here as aheadquarters base, he said. On the wages side, Singapore's relatively high taxation for executives, up to 32 per cent, is another minus for any company looking to staff its business with highly paid executives. Deloitte Ross Tohmatsu tax partner Michael Ainslie said: ''Hongkong is still definitely more attractive. Its source profits jurisdiction, which is slightly different from that in Singapore, is a big plus. ''Also, depreciation rules in Hongkong are very generous.''