In his maiden budget speech on February 27, Financial Secretary John Tsang also announced an additional HK$150 million (US$19 million) to attract high-quality conventions and exhibitions to the city.

Mr Tsang scrapped the 40 per cent tax on wine and alcohol (except spirits) with immediate effect. He pointed out that Hong Kong is Asia's leading logistics, trading, financial and exhibition centre. Equipped with sophisticated communications and transportation networks, it offers the best environment for traders worldwide. The wine duty exemption will bring more opportunities to Hong Kong including auctions, wine distribution and storage.

Hong Kong Trade Development Council (HKTDC) Chairman Jack So supported the initiative, saying Hong Kong now has the potential to become the Asian hub for wine trading, promotion and investment and the "preferred platform for promoting wine to the Chinese mainland market".

International Wine Expo

Responding to these favourable conditions, the HKTDC will organise its first Hong Kong International Wine Expo later this year. "Hong Kong is experienced in organising trade fairs for all kinds of merchandise," said Mr So. "We believe that the first Wine Expo will attract international suppliers and dealers of table wine and related accessories. We are confident that the expo will enhance Hong Kong's status as a wine trading, promotion and investment hub."

Mr So also supported the Financial Secretary's proposal to inject US$19 million into the promotion of Hong Kong's convention and exhibition industries, a proposal seen as sharpening Hong Kong's edge in the face of regional competition.

The atrium expansion of the Hong Kong Convention and Exhibition Centre – the venue for the city's major trade shows – will open next year, increasing overall exhibition space by 40 per cent to about 66,000 square metres. "This will allow existing fairs to expand and enable Hong Kong to host more international mega conventions and exhibitions," added Mr So.

Hotels win, too

The Hong Kong Financial Secretary also scrapped the 3 per cent tax on hotel accommodation, the waiver of which will be appealing to foreign visitors, according to the hotel industry sector. Hong Kong has long been famous as a duty-free port and this move only furthers its image. Another budget proposal that will help the tourism industry is the provision of 10 sites for building more hotels.

Green incentives include a reduction in the first registration tax for environmentally commercial vehicles and more concessionary profits tax reduction for capital expenditure on environmentally machinery and equipment.

On tax cuts, businesses will get a one-off 75 per cent reduction in profits tax while the corporate profits tax would be reduced by 1 percentage point to 16.5 per cent. Business registration fees will also be waived for the 2008-09 financial year.

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