Tax-Free Zone for Art in China????

Beijing Gehua Cultural Development Group ( BGCDG ), a conglomerate owned by the Beijing municipal government  is trying to create a tax-free zone for companies in the arts-and-entertainment world in Beijing. The Freeport, expected to partially open next year, promises warehouses for art storage, offices for companies involved in everything from luxury goods to software design, and production facilities for film and television.

All services and goods exchanged at the Freeport, which is expected to cost  BGCDG  5 billion yuan (US$802.1 million) to build, will be free of government taxes. Last year, BGCDG  signed up English auction house Sotheby's as a partner to run an art-auction business out of the Freeport.

However not everyone thinks it’s a good idea. Critics feel  it is foolish to think creative industries would sprout the same way low-cost manufacturing did in China's special economic zone, as they are essentially different.

Right now BGCDG  is in negotiations to have the help of Euroasia Investment SA. The facility is modeled on Euroasia's existing Singapore Freeport facility, which is a high-security storage facility for art storage and tax-free trading of high-value collectibles. While a contract has yet to be signed, both said they are confident they will be able to complete a deal soon and have a facility running by 2014.

Euroasia is banking on demand from Chinese collectors who wish to avoid the hefty duties and levies on importing valuable art. Imported works of art are subject to a 34% tax of the purchased value. Many wealthy Chinese collectors who have bought art abroad have smuggled their works or played down the value of the works to customs to lessen the tax blow, but the Chinese government has begun to crack down on the evasion.

Hmmm..... so what does this mean? Well it's very interesting but a little  too chiam for people like us. But for those wealthy Chinese, that's something to look forward to!!!!