From the 8/22 Wall Street Journal: Hong Kong and Chinese officials have signed a new taxation agreement intended to make Hong Kong more attractive as an offshore base for investments in mainland China. The pact, signed yesterday, will reduce the rates of tax paid by Hong Kong-based firms and individuals on investment income - including dividends, interest, capital gains and royalties - they earn from companies on the mainland. The new arrangement is an extension of the existing system for avoiding double taxation, in place sicne 1998, which covers taxes on profits and wages. Hong Kong has very low rates of personal and corporate income tax, but officials have been further tweaking the tax system to make it more enticing to investors. Recent measures include abolishing Hong Kong's estate tax and the exemption of offshore investment funds from the profits tax. Among the agreement's provisions is a cut in the top tax rate on interest and royalties to 7% from the 20% individual rate and 10% corporate rate. The pact also exempts Hong Kong investors from paying Chinese capital-gains tax on the sales of shares in mainland companies, as long as the shareholding is less than 25% of the company and doesn't primarily involve real estate. The agreement, which requires formal ratification by both sides, will take effect for Hong Kong taxes in the FY beginning 4/01 and for Chinese taxes in the FY beginning 1/01. There you have it: the Chinese Communists know more about investment-based fiscal policy than the US Congress, including nearly every Democrat and RINO scum like Linc Chafee. Don't be surprised when Asia's economy starts pulling major investment dollars away from the West and creates more jobs, investment opportunities and infrastructure there than here. It's what we deserve for giving in to the whiners who want to keep taxes high (including the Estate Tax) all to feel good about themselves.