Scrapping of capital duty good for investments

Despite a considerable loss in revenue, Hong Kong moves forward with eliminating the tax in order to spur investments.

The government gazetted the Companies Ordinance (Amendment of Eighth Schedule) Order 2012 to abolish capital duty on March 16.

Secretary for Financial Services & the Treasury Prof KC Chan said the order will implement the Financial Secretary's proposal to abolish the capital duty levied on local companies.

He said the amendment will encourage investors to establish their businesses in Hong Kong to raise capital and expand their operations. The amendment will, however, cost Hong Kong $90 million a year in government revenue.

It will be applicable to companies which lodge documents about incorporation, increases in nominal share capital or the issuing of shares at a premium with the Companies Registry from June 1. The order will be tabled at the Legislative Council on March 21.