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HKICPA Welcomes the New Government’s Bold Taxation Changes Announced in First Policy Address

11 October 2017

(HONG KONG, 11 October 2017) The Hong Kong Institute of Certified Public Accountants (HKICPA) welcomed the proposed changes to the taxation system that were announced by HKSAR Chief Executive Carrie Lam in her first policy address today. The proposed changes to profits tax supporting small and medium sized enterprises (SMEs), and the proposed tax deduction for research and development are what the HKICPA has long campaigned for.

 

On the two-tier profits tax rate

 

The Institute has proposed a special lower tax rate for SMEs in our budget submissions to the government for several years and is glad to see that the reduced tax rate proposed is even more competitive than we had campaigned for. SMEs constitute an important part of Hong Kong's economy, representing 98% of businesses. This new tax rate would significantly lower the tax paid by many SMEs. In 2014-15 roughly 80,000 companies (around 80 percent of tax-paying companies) had assessable profits of less than $2 million.

 

At the same time, many governments around the world offer additional support for the SME sector, and this proposal will improve Hong Kong's international competitiveness and attractiveness to start-ups and small business operators.

 

We welcome the special measure proposed by the Chief Executive that only one enterprise nominated by each business group be eligible for the lower tax rate. This is to ensure that this is targeted at SMEs and that large companies do not abuse the concession.

 

However, we believe there should be a clear definition of "business group" and we look forward to more details from relevant government departments at a later stage.

 

On incentives for research and development (R&D)

 

The proposed tax deduction for research and development is considerable and will support innovation and technology and start-up companies in Hong Kong. The Institute has been advocating "super deductions" for R&D expenditure for many years, as well as other R&D-related measures. The proposed deductions are more generous than we anticipated. R&D is essential to the success of innovation and technology, which is why many countries, including China, offer similar incentives.

 

The new proposals should also seek to simplify the incentives for R&D and intellectual property development and usage. Currently these incentives are too limited and too inflexible, which makes it difficult for Hong Kong to compete internationally. The current proposed tax deduction goes some way to remedy this situation.

 

We do not think these measures will have a significant impact on government revenue given that Hong Kong consistently generates large surpluses, as acknowledged by the Chief Executive, and the economic outlook is expected to be positive.

 

Indeed, more money invested in R&D will, in the longer term, boost the economy and bring in more revenue for the government.


香港會計師公會歡迎新政府於首份《施政報告》

提出有力的稅務新方案

 

(香港,二零一七年十月十一日) 香港特別行政區行政長官林鄭月娥今天發表上任後首份《施政報告》。香港會計師公會(下稱「公會」)歡迎報告提出的稅改措施。新建議的利得稅制方案可紓緩中小企的稅務負擔,而稅務減免則可推動企業投資科研,該等措施亦是公會一直以來不斷向政府建議的稅務政策,公會對此表示非常歡迎。

 

兩級制利得稅制方案

 

公會多年前已在財政預算案建議中,向政府提出給予中小企較低的特別稅率,很樂見今次建議的低稅率比我們之前所提出的更具競爭力。中小企業是支持香港經濟的重要一環,並佔公司總數 98%。新稅制將顯著降低中小企的稅務負擔。2014 2015年度,本港約有 8 萬家公司(佔所有須繳稅公司的 80%)持有 200 萬元以下應評稅利潤。世界各地的政府都為中小企業提供額外的支援,是次建議將會提高香港的國際競爭力,並吸引更多初創企業及小型企業在港營商。

 

我們同意限制每個業務集團只可提名一間企業受惠於較低稅率,此舉能確保上述稅務優惠能惠及中小企業,避免受大型企業所濫用。

 

不過,我們相信應該對「業務集團」有一個明確的定義,我們期待稍後時間相關政府部門會公布更多的細節。

 

有關研發的激勵措施

 

有關研發的稅務減免幅度相對高,將為香港的科技及初創企業提供支持。公會一直主張為企業的研發開支提供「超額扣稅」及其他研發相關措施,而是次施政報告建議的扣稅額比我們預期高。研發對於創新科技的成功發展至關重要,因此,多數國家(包括中國在內)均已提供超級扣減等激勵措施。新的建議亦簡化了研發以及知識產權開發和使用的激勵措施。現有的激勵措施限制較多,亦不夠靈活,這使香港難以與其他國家競爭,而今次所提出的稅務減免在國際市場上將具有相當的吸引力。

 

我們認為上述措施不會對政府的財政收入做成很大影響,正如行政長官所說,香港持續錄得充足財政盈餘,經濟狀況亦預計會持續理想。

 

事實上,加大研發投資可促進經濟長期增長,為政府庫房帶來更充裕的收入。

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