Tricor, a member of the Bank of East Asia Group, is a leading professional provider of April 2005 Vol. 2, No.2 integrated business, corporate and investor services in Hong Kong, Greater China and South East Asia. Our services include Accounting, Company Formation, Corporate Governance & Company Secretarial, Executive Search & Selection, Initial Public Offerings & Share Registration, Payroll, Fund and Trust Administration. Tricor has built its reputation and professional expertise through the acquisition of the corporate service businesses of three of the “Big 4” international accounting firms: Deloitte Touche Tohmatsu and Ernst & Young in Hong Kong, and PricewaterhouseCoopers in Hong Kong and Singapore. Our mission is to be The Business Enabler of choice. Principal Tricor subsidiaries Abacus Share Registrars Limited Barbinder & Co Pte Ltd Evatthouse Corporate Services Pte Ltd Outsource Centre Pte Ltd Secretaries Limited Standard Registrars Limited Member of the BEA Group Strath Corporate Services Limited Tengis Limited Tricor Executive Resources Limited Please visit our website at www.tricor.com.hk Tricor Investor Services Limited © 2005 Tricor Services Limited. All Rights Reserved. E-mail: [email protected] MemberMember ofof thethe BEABEA GroupGroup Beijing Hong Kong Macau Shanghai Singapore Tortola (BVI) Tricor Consultancy Tricor Services Limited Tengis Business Services Shanghai Tricor Tengis Tricor Singapore Pte Tricor International (Beijing) Limited 28/F, BEA Harbour View Limited Consultancy Limited Limited Trustee Limited Suite 1808-1809 Centre 17 Andar E Room 3109-17 #11-00 PWC Building, East Asia Chambers, P.O. 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Da Praia 381 Huai Hai Zhong Road British Virgin Islands Avenue Tel: (852) 2980 1888 Grande Shanghai 200020 Tel: (65) 6236 3333 HONG KONG BUDGET SUMMARY Beijing 100004 Fax: (852) 2861 0285 Macau China Fax: (65) 6236 4399 Tel: (1 284) 495 5588 / China (1 284) 495 5888 Tricor Services Limited Tel: (853) 788 022 Tel: (86) 21 6391 6893 Fax: (1 284) 495 5088 Tel: (86) 10 6505 8950 24/F, Prince‘s Building Fax: (853) 788 021 Fax: (86) 21 6391 6896 2005 - 2006 Fax: (86) 10 6505 8952 Central, Hong Kong Tel: (852) 2289 3222 Fax: (852) 2890 9262 TRICOR SERVICES LIMITED Under both phases of CEPA, a total of 1,108 Hong Kong CHIEF EXECUTIVE & BUDGET HIGHLIGHTS products have been granted tariff-free treatment for export to MANAGING DIRECTOR MANAGING DIRECTOR On 16 March 2005, Mr. Henry Tang, Hong Kong’s Financial the Mainland, representing about 95% of our domestic exports Johnny Ng Julian Chow Secretary, delivered his second Budget Speech to the Legislative to Mainland China. With the introduction of CEPA Phase II, the Tel: (852) 2289 3422 [email protected] Tel: (852) 2980 1238 [email protected] Council. This Budget presented the Government’s success in cost liberalization of trade in services has been extended to 26 DIRECTORS - BUSINESS SERVICES control, introduced additional measures to improve the business sectors. Shirley Tsang H C Ying environment, and offered some tax concessions. As expected, Tel: (852) 2980 1298 [email protected] Tel: (852) 2289 1402 [email protected] only limited tax relief was proposed, consistent with the For SMEs, which represent 98% of all business establishments in Kimmy Chan Patrick Wong Government’s prudent approach in managing public finance. Hong Kong and employ 1.3 million people, a total of HK$500 Tel: (852) 2289 3214 [email protected] Tel: (852) 2980 1200 [email protected] million will be granted to the SME Export Marketing Fund and COST CONTROL the SME Development Fund. The funding will help SMEs to DIRECTORS - CORPORATE SERVICES enhance their competitiveness, to secure loans and access to Natalia Seng Betty Yeung Mr. Tang announced that with the various control measures markets outside Hong Kong and to upgrade human resources. Tel: (852) 2980 1688 [email protected] Tel: (852) 2289 3289 [email protected] taken by the Government, such as reducing civil service Patsy Cheng Diana Chung Veronica Lin establishment, adjusting civil service pay, prioritizing service Tel: (852) 2980 1338 [email protected] Tel: (852) 2289 3266 [email protected] Tel: (852) 2980 1600 [email protected] provision and streamlining procedures, the operating deficit for The Government will continue to focus on developing the Susan Lo Paul Moyes Cynthia Wong 2004/05 is forecast to be HK$14.1 billion, much lower than the tourism and logistics industries. Hong Kong Disneyland is Tel: (852) 2289 3274 [email protected] Tel: (852) 2980 1618 [email protected] Tel: (852) 2980 1328 [email protected] HK$46.6 billion originally estimated. scheduled to open in September 2005, resulting in the creation of 5,000 new jobs. In this fiscal year, the Government will also DIRECTOR - INVESTOR SERVICES IMPROVING THE BUSINESS ENVIRONMENT complete a number of major tourism infrastructure projects, Allan Tong among which are new hotels opening by the end of 2006, Tel: (852) 2980 1818 [email protected] In 2004 total exports of goods and offshore trade both increased adding about 14,000 rooms and generating employment for by 15%. The increasing number of visitor arrivals, especially of 7,500 staff. DIRECTORS - CHINA SERVICES SENIOR CONSULTANT Mainlanders under the Individual Visit Scheme, generated extra Natalia Seng Shirley Tsang Marina Wong tourist spending and led to the creation of new job To assist the development of the logistics industry, the Tel: (852) 2980 1688 [email protected] Tel: (852) 2980 1298 [email protected] Tel: (852) 2289 1311 [email protected] opportunities. The unemployment rate fell steadily from its peak Government will provide funding of HK$5 million each to the of 8.6% in the middle of 2003 to a three-year low of 6.4% in Hong Kong Logistics Development Council and the Hong Kong DIRECTOR - EXECUTIVE RESOURCES the early months of 2005. Maritime Industry Council to enhance the marketing of Hong Fiona Yung Kong’s port, shipping and logistics facilities. Tel: (852) 2289 3230 fi[email protected] Disclaimer This publication is intended to provide only general information for clients and contacts of the Tricor Services Group. It does not purport to be comprehensive nor should it be relied upon or taken as a substitute for proper professional advice concerning specific situations which should be sought in a timely manner. Changes in law or circumstances may occur after the issue date which may make information contained in this publication no longer accurate. Please pay attention to its date of issue. TAX CONCESSIONS AND RELIEF In view of increases in the cost of living, Mr. Tang proposed to 2005/06 (proposed) 2004/05 increase the child allowance from HK$30,000 to HK$40,000 per Salaries Tax PERSONAL TAX RELIEF child to ease parents' financial burden. - Standard rate 16% 16% Mr. Tang proposed new allowances for dependent Personal allowances and concessionary deductions for 2004/05 - Progressive rates parents/grandparents aged 55 to 59. Taxpayers will be granted a and 2005/06 (proposed) are listed below: - First HK$30,000 2% 2% basic allowance of HK$15,000 each for dependent parents or - Next HK$30,000 8% 8% grandparents in this age group, with an additional allowance of - Next HK$30,000 14% 14% the same amount if these parents or grandparents are residing - Remainder 20% 20% with them. TAXES UNDER STUDY family businesses for future generations, protecting confidentiality 2005/06 (proposed) 2004/05 as well as taking advantage of overseas tax planning opportunities. HK$ HK$ The Government will conduct a public consultation on the Hence, unless an individual’s sole concern is minimization of Hong Personal Allowances introduction of a goods and services tax. The Government will also Kong estate duty, a trust setup is still a flexible and useful conduct a study on ”green taxes” on waste tyres and plastic bags. arrangement for a settlor who has accumulated substantial wealth Basic allowance 100,000 100,000 and who wishes to protect his/her assets and preserve them for Married persons allowance 200,000 200,000 OFFSHORE FUNDS his/her heirs according to a succession plan. In addition, a trust is Child allowance (from first to ninth child) 40,000 Each 30,000 Each Hong Kong is a major asset management centre in Asia. The still one of the best ways to administer a fund set up for charitable Dependent parent/grandparent allowance (aged 60 or above) Government has consulted the financial industry on the proposal or educational purposes. - Basic 30,000 Each 30,000 Each to exempt offshore funds from profits tax and will shortly introduce - Residing with taxpayer 60,000 Each 60,000 Each the necessary legislative amendments to effect this exemption. For trusts that have already been established, settlors should not Dependent parent/grandparent allowance (aged 55 to 59) rush into winding up their structures following Mr Tang's speech as - Basic 15,000 Each - Each PROPOSED ABOLITION OF ESTATE DUTY - THE END OF there is still uncertainty as to when the abolition of estate duty - Residing with taxpayer 30,000 Each - Each TRUST & ESTATE PLANNING? would become effective. Even after the effective date has been Dependent brother/sister allowance 30,000 Each 30,000 Each proclaimed, a settlor should be fully aware of the implications and Single parent allowance 100,000 100,000 At present, subject to certain exemptions, estate duty is levied on a pros and cons of continuing the trust structure or its termination Disabled dependent allowance 60,000 Each 60,000 Each person's assets in Hong Kong valued at over HK$7.5 million at the time of death.