London Daily

Focus on the big picture.
Monday, Aug 25, 2025

Hong Kong faces ‘restraint’ under global tax rules as China urged to agree

Hong Kong faces ‘restraint’ under global tax rules as China urged to agree

Few obstacles stand in the way of China accepting a global minimum tax rate, analysts say, but the new rules could impact Hong Kong as a leading international tax haven.

China has been urged to join a push by the United States for a global minimum tax rate, with experts saying it is an opportunity for Beijing to participate in international economic governance and create a common ground with Washington as high-level trade talks resume between the world’s two biggest economies.

The corporate tax floor of 15 per cent, agreed in a landmark accord by Group of Seven (G7) finance ministers at the weekend, could form the basis of a worldwide deal that US Treasury Secretary Janet Yellen said would halt a “race to the bottom on corporate taxes”.

There will be little harm in China accepting the tax regime because the country is already a magnet for global investors, analysts said, though Hong Kong could be affected.

“China will probably accept it, because the country no longer counts on preferential tax to attract investors and our actual rate is much higher,” said Ding Yifan, a senior researcher with the Development Research Centre of the State Council, a government think tank.

China has a nominal corporate tax rate of 25 per cent and grants a 15 per cent rate for qualified hi-tech companies.

While the cancellation of some local tax preferences has contributed to the relocation of foreign manufacturers in recent years, authorities have boosted efforts to open market access and improve the business environment to keep them onshore.

Ding, however, expected more negotiations with the US on the matter as the two countries resume economic dialogue.

“China can put its new demands on the table,” he said.

Last week, Yellen had a “candid” virtual meeting with vice-premier Liu He on a variety of macroeconomic issues.

Yellen, who proposed the global minimum tax in April, called the G7 decision on Saturday “a significant, unprecedented commitment” to level the playing field for businesses and encourage countries to compete on positive bases.

Andrew Choy, international tax and transaction services leader at EY Greater China, said the proposed tax arrangements would impact Hong Kong more than the mainland.

In Hong Kong the de facto tax rate is often lower than the statutory 16.5 per cent, whereas most foreign firms pay more for their mainland subsidiaries.

“It won’t reduce China’s competitiveness, nor force investors to relocate,” he said, adding Beijing should grasp the opportunity to make its voice heard.

Speaking in Hong Kong’s legislature Monday, Financial Secretary Paul Chan said the proposed changes to the global tax regime might affect some of the tax concessions the government offers to various industries.

“We would like to use low tax rates to promote development for certain sectors so we may be restrained by using a low tax rate regime as a competitive method,” Chan said in response to a lawmaker’s question.

A global tax minimum is likely to be discussed further by the Organisation for Economic Cooperation and Development (OECD) and the Group of 20 later this year. China’s finance ministry has not yet commented on the G7 agreement.

Cao Hongyu, a researcher with the Bank of China, one of the nation’s “big four” state-owned banks, said there were few internal obstacles for the government to implement the global minimum tax rate.

International negotiations would provide a chance for China to participate in and lead global economic governance, he said in a research report last week.

“Pushing forward the talks for a global minimum corporate tax rate can help safeguard China’s tax sovereignty, build a good business environment and protect the interests of Chinese companies that expand globally,” Cao said.

China should try its best to prevent excess limits on multinational companies and speak out for emerging economies, for instance setting preference for the least developed countries, he said.

“It will project China’s image of being a responsible country and help fight against deglobalisation.”

Newsletter

Related Articles

0:00
0:00
Close
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
×