London Daily

Focus on the big picture.
Friday, Oct 02, 2026

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
UK Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Andy Burnham Criticises Brexit and Says Rejoining EU Single Market Remains an Option
UK Imposes New Sanctions on Russian Military Networks and Propagandists
UK Launches Nationwide Early-Release Prison Scheme
Andy Burnham Says Security Services See Signs of Iranian Involvement in RAF Fairford Incident
Manchester City Found Guilty on Premier League Financial Charges After Independent Investigation
Scottish Court to Rule on Bid to Force No-Confidence Vote Against Aberdeen Council Co-Leader
UK Bans Extra Charges for Seating Children Under 12 Beside Accompanying Adults
UK Introduces Vaping Duty and New Licensing Requirements
Greggs to Close Four UK Factories and Cut 740 Jobs
Hundreds of Prisoners Released Early as England and Wales Prisons Reach 98% Capacity
UK Unveils New Russia Sanctions Targeting War Funding and Shadow Fleet
Burnham Says There Are Strong Indications of Iranian Involvement in RAF Fairford Security Breach
Prime Minister Andy Burnham Raises Prospect of Reviewing Britain's Post-Brexit EU Relationship
Markets Price in Bank of England Rate Increases as Inflation Rises to 3.1%
UK Borrowing Costs Climb Toward 5.5% as Global Bond Sell-Off Intensifies
UK-France One-In-One-Out Migration Agreement Expires as London Seeks Alternative Measures
Southwest England Faces Flood Alerts After Heavy Autumn Storms
UK Expands Funding for Rapid Electric Vehicle Charging Infrastructure
Welsh Government Approves Funding to Upgrade South Wales Transport
Northern Ireland Tensions Rise as Orange Order Rejects Drumcree Compromise
NHS Leaders Back Early Design of Proposed National Care Service
More Than One-Third of Regional UK Universities Face Financial Deficits
UK Current Account Deficit Narrows as Cross-Border Financial Flows Remain Strong
Bank of England and FCA Issue New Rules for Stablecoins and Digital Assets
MI5 Warns UK Universities Over Research Links With Chinese Institutions
UK Energy Price Cap Rises 4% as Electricity VAT Is Temporarily Suspended
Equity Calls for UK Personality Rights to Protect Performers From AI Replication
OpenAI Pauses Advanced Model Training Following Safety Concerns
Scottish Government Proposes Replacing 32 Councils With Larger Regional Authorities
Ofgem Raises UK Household Energy Price Cap by 4% From October
UK Counter-Terrorism Police Continue Investigation After Five Arrests Near RAF Fairford
OECD Cuts UK 2027 Growth Forecast to 1%
Labour Says State Pension Triple Lock Remains Protected Through Current Parliament
Andy Burnham Pledges National Care Service With Free Social Care in England
Six Flags Permanently Shuts Landmark X2 Roller Coaster Following Safety Scandals
Metropolitan Police Rule Out Terrorism in Golders Green Stabbing Investigation
Lithium-Ion Battery Identified as Cause of Fatal Merseyside House Fire
UK Department Rejects New Sea Use Framework Due to Stakeholder Fatigue
Major Thames Water Pipe Burst Causes School Closures in London
Aldi Commits £900 Million to Expand UK Supermarket Network
Scottish Affairs Committee Warns Skills Shortages Threaten Defence Sector Expansion
Parliamentary Committee Warns Northern Ireland Budget Deadlock is Stalling Economic Growth
NHS Hospitals in England Face Severe Shortages of Essential Medications
Home Secretary Signals Major Overhaul of UK Immigration and Leave to Remain Policies
Chancellor Promises New Job Schemes Alongside Strict Fiscal Discipline
Energy Secretary Proposes Taxpayer-Funded Green Transition and National Electricity Grid
UK Government to Renationalise Avanti West Coast Railway Franchise in March
Prime Minister Andy Burnham Pledges Major Social Care and Infrastructure Reforms
Five Suspects Released on Bail Following Alleged Bomb Plot Near RAF Fairford
×