HKEx said in a statement that this estimation is based on a consolidated tax rate of approximately 3.03%, (including business and construction tax, education surcharge, and urban maintenance) on ZNH's international flights.
The new regulation was set forth by the Ministry of Finance and the State Administration of Taxation saying “since 1 January 2010, entities or individuals within the People’s Republic of China providing international transport services shall be exempt from business tax”.
China Southern Airlines (NYSE:ZNH) is the least effected by the change in policy. Air China (HKG:0753) (SHA:601111), the country's flagship carrier, is going to benefit the most from the new regulation followed by China Eastern Airlines (NYSE:CEA) (HKG:0670). Main hub for China Southern Airlines (NYSE:ZNH) is located in Guangzhou while Air China (HKG:0753) is dominant in Beijing originating most international flights. China Eastern Air (NYSE:CE) controls the skies over Shanghai, China's business center.