25.

Last year, a 10 per cent corporate tax rebate was given to assist companies affected by the economic downturn. This rebate will not be extended for a second year because the economy has rebounded strongly. Our corporate tax rate was last reduced to 26 per cent in 1997 and remains generally competitive at this level. However, in recent years, many developed countries have been lowering corporate taxes to stimulate investments and if this trend continues, our tax competitiveness will be eroded over time. I have therefore decided to take a cautious next step by reducing the corporate tax rate by 0.5 per cent to 25.5 per cent with effect from Year of Assessment 2001. Maintaining a competitive tax regime is a cornerstone of our fiscal strategy and the tax cuts over the years have contributed greatly towards our economic growth. Revenue loss arising from the reduction in corporate tax rate is estimated at $140 million annually.