China’s Taxman May Axe HK Economy

Hong Kong’s economy, already looking a little wobbly, could suffer a major blow if China is serious about cutting down on tax-dodging. With capital flowing out and debt problems mounting, Beijing has both economic and political reasons to clamp down on the use of the territory for re-invoicing of trade transactions. This not only is an easy way of moving money out of the country but bolsters Hong Kong tax receipts at the expense of those of the mainland.

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