PRESS RELEASE

GST and maintaining the competitiveness of Hong Kong's logistics industry

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In response to media enquiries, a Government spokesman said today (October 13) that the proposed tax reform with GST introduction has been designed to maintain competitiveness of the logistics industry, which everyone knew was very important to Hong Kong as a major trading and logistics centre.

As exports of goods and international supplies are proposed to be zero rated (i.e. no GST when exporting the goods and services, but entitled to reclaim input tax on related purchases), there would be no GST cost on these goods and services and competitiveness of these trades should therefore not be affected. In considering the definition of international supplies, the spokesman said that the Government had deliberately proposed a generous definition to include as many ancillary and supporting services related to exports (e.g. services provided by the logistics industry) for zero rating as possible.

In addition, proposed facilities such as the Deferred GST Payment Scheme and implementation of a Qualifying Exporters Scheme would be helpful to importers in relieving their possible cashflow concerns. The spokesman also said that similar GST postponement schemes were in place in most other jurisdictions with a GST. These proposed schemes would help maintain Hong Kong's competitiveness as an international trading and logistics hub.

The spokesman said the Government fully appreciated the concerns of the logistics trade in regard to the likely increase in their workload and cost for complying with the GST goods declaration requirements. However, the Government was committed to keep these requirements as simple and incur the least changes possible. Under the proposal, trade declaration charges would be reduced and duties on fuel would also be reduced to enhance the competitiveness of the logistics trade. Importers and exporters would be allowed to electronically lodge goods declaration, together with trade declaration (which they have been lodging under the existing import and export framework), simultaneously to reduce workload.

The spokesman also said that the Government would work closely with the import/export and logistics trade and relevant business chambers to ensure that the proposed GST framework on trade would maintain the competitiveness of Hong Kong.

Ends/Friday, October 13, 2006
Issued at HKT 18:15

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