Match Singapore tax lure, specialist urges

SINGAPORE will continue to lure foreign companies away from Hongkong unless the Government improves the tax environment for firms seeking a regional base, a tax specialist has warned.

An associate director of KPMG Peat Marwick, Ms Jennifer Wong, says Taiwanese firms are already using Singapore as an access point for China in preference to Hongkong, even though it is further away, because of better tax incentives.

She singled out Singapore's double-tax treaty with China, concluded late last year, and its guaranteed return agreement as inducements for companies. The agreements cut companies' tax bills and protect their assets in the event of nationalisation.

Ms Wong said that in the past companies wanting to do business with China - especially Taiwanese companies - usually worked through Hongkong because of its position.

''But after the double-tax treaty and guaranteed return agreements, some Taiwanese are looking at setting up investments in China through Singapore,'' she said. ''So Hongkong has to offer certain tax benefits or incentives.'' The Government is drafting proposals to go to the Executive Council with a long-term aim of establishing double-tax treaties, but it is expected to tread softly, beginning with agreements in specific areas such as shipping.

Many tax specialists as well as companies are pushing for a series of comprehensive treaties.