A bill that aims to implement the proposal to abolish estate duty announced in the 2005-06 Budget will be submitted to Hong Kong Legislative Council on May 11.

According to a government press release on Wednesday, the Revenue (Abolition of Estate Duty) Bill 2005, to be gazetted on May 6, proposes that estates of people who die will not be subjectto estate duty.

It is estimated the proposal will cost the government annual tax revenues of around 1.5 billion HK dollars (192.3 million US dollars).

However, the abolition is expected to encourage investment in both financial assets and the property market, thereby contributing additional revenue from stamp duty and other taxes.

To promote the development of Hong Kong's asset management business, the government consulted interested parties and the public at large last year on the abolition of estate duty.

The majority view supports abolition, which will encourage people, including overseas investors, to hold assets in Hong Kong through a local corporate vehicle or trust.

Those who currently avoid the tax through overseas investments will also be encouraged to transfer their investments back to HongKong.

The proposed abolition of estate duty will also reduce the timetaken for obtaining the grant of probate or letters of administration, thereby helping ease cash-flow problems heirs to an estate currently face.

Source: Xinhua