Tax rates cut to woo talent to island

PUBLISHED : Wednesday, 24 August, 2011, 12:00am
UPDATED : Wednesday, 24 August, 2011, 12:00am


Companies investing in a newly opened free-trade island in Zhuhai will enjoy a profits tax rate that is 40 per cent lower than elsewhere on the mainland, while Hong and Macau residents working there will be granted salaries tax rebates.

The benefits are among measures aimed at turning Hengqin, a 106-square-kilometre island next to Macau's Taipa and Coloane islands, into a service industries hub by wooing investment in tourism, financial services and creative industries.

The profits tax of 15 per cent compares with 25 per cent elsewhere on the mainland and is the lowest in eastern China.

Zhou Jianchun, director of Zhuhai's Foreign Affairs Office, said that while the policies on customs and revenue were very similar to those at 15 other free-trade zones set up on the mainland since the early 1990s, Hengqin was aiming higher.

'The major difference is that Hengqin includes high-class residential communities, shopping malls and theme parks,' Zhou said.

While the previous free-trade zones were set up only for manufacturing, the island aimed to attract tourism, financial services, cultural innovation, Chinese medicine and health care, scientific research and hi-tech industries. The measures were spelled out in a State Council circular on July 14.

According to the circular, all goods shipped to Hengqin will be exempted from import duties, provided that they are used for production.

A delegation of Guangdong officials detailed the initiatives at an investment promotion seminar held in Hong Kong yesterday.

Niu Jing, director of the management committee for the Hengqin New Zone, said Hong Kong and Macau residents who worked on the island would enjoy a salaries tax rebate from the Guangdong provincial government as the mainland's rate was higher than that in the two cities.

'The rebate will be used to attract talent from the two special administrative regions,' he said.

The standard rate of salaries tax in Hong Kong is 15 per cent, compared with a range of 5 per cent to 45 per cent on the mainland.

Hengqin's gross domestic product per capita is projected to reach 120,000 yuan (HK$146,000) in 2015. The island is named in the nation's 12th five-year plan as a key area for economic co-operation by Hong Kong, Macau and Guangdong.

Zhou said there would not be any casino development in either Hengqin or Zhuhai.


The population of Hengqin Island last year. It is estimated this will grow to 280,000 in 2020, aided by infrastructure and investment projects