China established new zone for cooperation with Hong Kong

04.07.2012 According to the decision of Chinese government the special economic zone for cooperation with Hong Kong was established. The zone is situated in Shenzhen. It was announced that construction of the new zone will begin in 2013 and is projected to last for 8 years. The new zone will become a platform for expansion of China's capital market and enhance the international convertibility of the yuan. To encourage the development of companies in Shenzhen government will establish preferential tax rate of 15% and approve the list of sectors in which such rates will apply (including the list will include financial and legal firms).

Expert’s opinion

China is a country that clearly understands that for the stable development of the country is firstly necessary to have stable and developed economy. Actually in order to achieve this goal, China is modernizing its system (including tax system - http://hbcomp.ru/about/news_and_mailings/news_jurisdictions/3316/), looking for new ways of cooperation with prospective jurisdictions. One of them is Hong Kong. It is a major emerging financial center, which also aims to develop the environment for business investments and increase the attractiveness for investors from all around the world. With the introduction of a special zone in China for cooperation with Hong Kong it will become possible not only to invest in Chinese companies in Hong Kong, but also it will appear an opportunity for financial institutions in Hong Kong to invest in companies of China as a result of doing business in mainland China. This innovation will undoubtedly be very attractive to investors and will help to use the new tax schemes.

On the basis: http://en.ec.com.cn/investchina/investchinadevelopmentzone

Mikhno Alexandra ( Paralegal of Moscow office of “Honest and Bright”)