PRESS RELEASE

(Source : Government Information Centre)

Interest on Tax Reserve Certificates

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The Government Gazette published today (June 3) contains a Legal Notice to the effect that the Secretary for Financial Services and the Treasury has authorised a change in the rate of interest payable on Tax Reserve Certificates. From Monday (June 6), the new annual rate of interest will be 1.0833% against the current rate of 0.7500%, that is, the new rate will be $0.0902 per month per $100.

Tax Reserve Certificates bear simple interest and interest is calculated monthly (including part of a month) from the date of purchase to the date of payment of tax.

Interest is only credited when certificates are used to pay tax and no interest is due where the principal value of a certificate is repaid to its holder.

The rate of interest payable on Tax Reserve Certificates is periodically revised in line with market trends. Currently, it is reviewed every month based on the average of the prevailing six-month time deposit interest rates for $100,000 offered by the three note-issuing banks.

The new rate will apply to all certificates purchased on or after June 6, 2005. Certificates which were purchased before June 6, will continue to earn interest at the rates prevailing on their respective purchase dates. More interest rate information can be found on the Inland Revenue Department website (www.ird.gov.hk). The public can also obtain a copy of the Tax Reserve Certificate Interest Rate Table from our 24-hour information hotline at 1878033. Here is a summary of the interest rates for the past few months:

This is always subject to the general rule that interest ceases to accrue after 36 complete months.

Ends/Friday, June 3, 2005

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