The Hong Kong Monetary Authority says there are 'serious anomalies' in the taxation of bond incomes and plans a review of the system in a bid to make Hong Kong's debt markets more internationally competitive.
Speaking at a debt conference yesterday, HKMA deputy chief executive Tony Latter outlined a range of initiatives undertaken by the HKMA to strengthen Hong Kong's underdeveloped bond market. 'One area we are looking at is taxation,' he said.
'We acknowledge there are serious anomalies in the current arrangements for taxing interest income in Hong Kong.
'But, given the uniqueness of Hong Kong's tax structure, and the conflicting aims of retaining international competitiveness on the one hand and preserving fiscal revenue on the other, there is no easy solution,' he said.
The HKMA is sponsoring, under the auspices of the Hong Kong Institute for Monetary Research, a 'fundamental study of the taxation of financial intermediation in Hong Kong', said Mr Latter.
'This study will hopefully further inform the debate on this tricky subject, though I would not at this stage wish to guess as to the direction in which our advice will eventually point'.