Hong Kong's Legislative Council Wednesday passed the Revenue (Abolition of Estate Duty) Bill 2005 which seeks to amend the Estate Duty Ordinance to implement the proposal announced in the 2005-06 Budget to abolish estate duty.

The Ordinance will commence operation on Feb. 11, 2006.

The Secretary for Financial Services and the Treasury, Frederick Ma, said that apart from removing the unfairness and obstacles arising from the collection of estate duty, another key objective of the proposed abolition was to facilitate the further development of Hong Kong as an important asset management center.

The government consulted the public last year on whether to abolish estate duty. By and large, the majority view tended to support abolition.

Ma believed that by abolishing estate duty, Hong Kong can attract more local and overseas investors to hold assets here.

More companies and professionals will come here, which will facilitate the further development of asset management services, create more employment opportunities, and in turn make Hong Kong more competitive as an international financial center.

"The abolition of estate duty is not only a tax concession but also a long term strategic investment in Hong Kong's financial services industry and the overall development of the economy," he stressed.

It is estimated that the proposal to abolish estate duty will cost the government annual revenue of around 1.5 billion HK dollars (193.55 million US dollars). However, the government estimated that the abolition would help promote trading in Hong Kong's financial and property markets, and contribute additional revenue from stamp duty and other taxes.

"As asset management services can foster growth in other financial activities and a series of high value-added professional services, other industries will also benefit indirectly. The community, and hence members of the public, will enjoy the subsequent economic benefits," Ma said.

Source: Xinhua