Global and regional companies look more at value-added services and financial benefits rather than lower taxes when selecting where to locate corporate treasury centers (CTCs), according to a panel of experts attending The Asset 3rd Asia Treasury & Trade Summit held at the Four Seasons, Hong Kong.

In the competition to attract more CTCs, there is a general perception that authorities in Singapore and Hong Kong are perceived to be using lower tax benefits as a means of inducing more corporates to locate in their respective jurisdictions. But favourable corporate tax benefits are not the primary issue for decision-making as to where to locate CTCs.

“Some corporates may choose to locate in both Singapore and Hong Kong. Tax benefits are not always the key consideration. It depends more on where you plan to operate your business extensively and where there are double tax treaty agreements that you can enjoy, then that will be your choice of location,” says Eddie Mak, group treasurer of Kerry Logistics.

For Angus Lai, treasury officer of Avnet, value-added services offered by the CTC’s location is the primary consideration rather than the tax benefits that are offered.

“We believe Hong Kong has many years of treasury center experience. The service from banks and other financial service providers are very good and the available tax advisory service are very professional. They can deliver what they promise in terms of service quality. For us the difference of 0.25 percent in the tax rate is not really a key consideration,” Lai says.

Lai’s comment is consistent with the feedback that the Hong Kong Monetary Authority (HKMA) has received from corporates who have located in their CTCs in Hong Kong.

“The regime for (CTCs) that we have here in Hong Kong, we aim to make it as transparent, as simple and as straightforward and administratively less burdensome. So we do not ask corporates to submit numerous reports or approvals or things like that because we think it’s not only a timing issue, resource issue but also a cost issue as well,” says Enoch Fung, head of market development for the HKMA.

“The more important one (key feature of Hong Kong CTCs) is that now the interest expense that you borrow from an overseas associated corporate would be eligible for deduction on a gross basis. That is important for corporates when it comes to inter-group borrowing-lending,” Fung says.