Rumours were rife over the last few months that a reduction of the corporate tax rate could be on the cards, but these died down as it became clear taxpayers should not expect a cut to be announced in finance minister Tharman Shanmugaratnam’s budget speech.

“Nothing was that surprising, as in the days before the speech everyone indicated not to expect the corporate rate to be reduced, and it wasn’t. Most didn’t expect it to happen, though it would of course have been a welcome development,” said Michael Palumbo, of Baker Hughes. “But at the same time, Hong Kong is only 0.5% lower and the actual effective tax rate of companies tends to be much lower due to incentive schemes and credits.”

PIC scheme

The enhanced deduction or allowance under the PIC scheme, available for a five year...