HONGKONG businesses will be under greater pressure from their mainland counterparts after the Chinese Government unifies tax rates for both domestic and foreign enterprises, according to Eddy Li, president of the China Hongkong Economic and Trade Association. Both state-owned and collective mainland enterprises are currently subject to a 55 per cent corporate tax rate, while foreign enterprises are taxed at 33 per cent. In addition, foreign enterprises in coastal open cities and special economic zones are entitled to more preferential tax policies, with tax rates of 24 per cent and 15 per cent, respectively. Officials from the State Taxation Bureau said that starting from next year, all mainland enterprises would be taxed at a uniform rate of 35 per cent, to be eventually reduced to 33 per cent. Mr Li said Hongkong businessmen were relieved that the tax rate for foreign businesses would not be raised. But with the reduction of the tax burden on mainland enterprises, Hongkong businesses would lose their superiority in taxation when competing with their mainland counterparts. ''This is going to put some pressure on Hongkong businessmen,'' said Mr Li.
