New favourable tax cuts for China’s private pension scheme are likely to lure participants as financial institutions vie for market share. Analysts said that tax on withdrawal of funds is down to 3% from 7.5%, a move likely to increase participation. China is granting tax benefits to citizens who participate in the retirement scheme, the scope of which was expanded in April to allow individuals to set up their own private pension accounts and voluntarily choose what products to invest in. Wang Fangchao, chief analyst of the nonbank financial sector at Cinda Securities, said that the actual tax burdens will significantly drop, and this should attract different income groups to the private pension accounts. Sally Wong, chief executive officer of the Hong Kong Investment Funds, said that the tax incentives will not have an immediate impact on offshore players.
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