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HKICPA makes recommendations for the government’s budget to reconnect Hong Kong with the international community and enhance its competitive edge

19 January 2023

Today, the Hong Kong Institute of Certified Public Accountants (“the Institute”) has announced its tax policy and budget proposals for the 2023-24 fiscal year. Under the theme "Reconnect and Renew”, HKICPA puts forward a range of measures under three main headings: 1) Reinforcing Hong Kong’s international status and competitiveness, 2) Making Hong Kong a more liveable city and community measures and 3) Measures to help achieve carbon neutrality and sustainability goals. Aiming to enhance the city’s competitiveness and to help attract overseas investment and talent in the globally competitive environment post-Covid-19, the recommendations call on the government to provide specific incentives and concessions for international businesses and individuals, roll out targeted support measures to businesses and citizens to help overcome the challenges and headwinds pending a stronger economic recovery, while also taking necessary steps to enable Hong Kong to achieve carbon neutrality by 2050.


HKICPA estimates that the fiscal deficit for 2022/23 will reach HK$113.9 billion. This is slightly more than double the government’s original forecast, at the time of last year’s budget, of HK$56.3 billion, as a result of lower land sales in 2022-23, which includes the recent withdrawal from tender of a large site in Stanley, a sluggish property market generally, and a weak economy following the fifth wave of the pandemic in 2022. “We expect that Hong Kong will continue to face various challenges in 2023 due to the global outlook, with the World Bank forecasting only 1.7% growth worldwide, the continuing conflict in Ukraine, high inflation affecting many economies and rising interest rates. With the projected deficit, Hong Kong’s fiscal reserves are expected to drop to HK$843.2 billion by the end of March 2023,” says Loretta Fong, CPA, President of the Institute.


The post-Covid period is still full of variables. “The rising tide of uncertainties in the global economy, the US-China tensions and geopolitical conflicts, as well as internal constraints, such as the ‘brain drain’, among other factors, continue to affect Hong Kong’s economy and delay the return of ‘feel good factor’. Growth for the whole of 2022 is expected to be negative 3.2%. Hong Kong clearly needs a booster shot. So, to help counter these challenges, our proposals recommend the introduction of a number of measures to reinforce the city’s competitive advantages, and to enhance Hong Kong’s status as a liveable city, with a favourable tax system for businesses and individuals, and a good living and working environment. In order to achieve this, more also needs to be done in terms of progressing towards our sustainability goals and improving our environmental performance in Hong Kong,” explains Ms. Fong.


Reinforcing Hong Kong’s international status and competitiveness


The Institute welcomes the government’s recent efforts to reduce the anti-epidemic measures and speed up the process of returning to normality, and would hope to see the remaining restrictions lifted as soon as possible, to enable Hong Kong to fully re-emerge and reconnect with the international community.

With Hong Kong dropping a place in global financial centre rankings in 2022, the Institute proposes that the government attract more overseas investment by building on its existing business-friendly environment, with measures such as offering a 50% profits tax concession for relevant profits derived by qualifying regional headquarters (“RHQs”) and introducing a simple form of group loss relief, which would encourage the setting up of more RHQs in Hong Kong.


“To help capitalise on opportunities in the Greater Bay Area (“GBA”), we suggest the setting up of a dedicated, flexible fund to support business promotion and development in GBA for professional services, which could also be used for internship programmes, as well as to provide employment opportunities in Hong Kong for young GBA professionals in sectors suffering from acute manpower shortages, such as accounting. We also suggest the government lend its support to Hong Kong professionals’ in GBA cities, especially Qianhai and Nansha,” says Eugene Yeung, CPA, convenor of the Budget Proposals Sub-Committee.


The Institute believes that the pandemic-related quarantine and social distancing requirements over the past three years, and the unfavourable economic conditions, have had an adverse impact on talent inflow. This, together with the net outflow of productive people, has resulted in labour shortages and a talent gap. In order to attract and retain talent, therefore, the Institute suggests the government study the underlying reasons for the current “brain drain” and what might encourage people to stay or to return. It suggests that additional support be given to targeted industries, so that employers can offer more competitive salaries to attract talent, especially where skilled labour is in short supply, such as in the information technology (“IT”) sector and “green” industries, as well as professional services. Besides this, the government should consider some non-tax incentives to support talent mobility between Hong Kong and the GBA.


More specifically, to encourage overseas skilled workers to come to Hong Kong, raise their families here and stay for the longer-term, the Institute recommends the government introduce new measures such as allowances for their children’s education. “Given the low rate of child birth in Hong Kong, we also recommend measures to incentivise employers to let their staff work from home, or where this is not possible, to provide a deduction on the costs of hiring a helper or for child care/ crèche services, in the first one or two years after a child’s birth”, added Mr. Yeung.


As envisaged in the 14th National Five-Year Plan, IT is expected to be one of the key industries for Hong Kong in future. The Institute urges the government to back up the policy to promote innovation and technology, research and development and intellectual property (“IP”) development in Hong Kong by reviewing and revising the relevant tax rules. For example, HKICPA proposes the provision of tax credits for start-up companies engaged in relevant IT businesses and green industries. Meanwhile, introducing lower profits tax rates for qualifying industries for the first five years of profits (beyond the existing general concession on the first HK$2 million of assessable profits) would encourage the development of sectors that can contribute to the green economy and improve Hong Kong’s sustainability performance.


Small and medium-size enterprises (“SMEs”) continue to play an important role in Hong Kong’s economy. There are over 350,000 SMEs, constituting more than 98% of business establishments and employing about 45% of the workforce in the private sector. Their vitality and business performance help drive Hong Kong’s economy. The Institute would like to see more support for their digital transformation, including by providing SMEs with a subsidy to hire an IT specialist, for a limited period of around 36 months, to facilitate this process. Such support could also be used to enable SMEs to engage an accountant and upgrade their accounting systems in readiness for the introduction of electronic filing of profits tax returns, which is now under development. The Institute also proposes establishing a new fund or expanding existing training funds to cover practical training for businesses in IT and digitalization.


“To help attract more investment, we would also urge the government to provide greater certainty for taxpayers”, says Mr. Yeung. “The implementation in Hong Kong of major international tax-driven developments, like the Base Erosion and Profit Shifting 2.0 initiative, and the imposition of a global minimum tax on large multinational enterprises, raises many practical questions. Key stakeholders should be consulted as early as possible in the process and the government should provide clear guidance and support to those directly affected by revised rules. In addition, given the many tax-related changes taking place in recent years, as well as the growing demand on public revenues and other fiscal challenges that we face, the Institute continues to advocate a more extensive review of the tax system,” Mr. Yeung added.


Making Hong Kong a more liveable city and community measures


Hong Kong’s healthcare system has a good reputation overall and is known for its quality, efficiency and broad community coverage. However, long waiting times, as well as the overwhelmed capacity of public hospitals during the pandemic, have highlighted the acute manpower shortage in Hong Kong’s public hospitals. “The Institute believes that the community should be encouraged to adopt a more active and healthy lifestyle, which in the longer-term, will help reduce the burden on the public health system. We also propose encouraging greater use of private healthcare services. We recommend, therefore, a tax deduction on expenses on approved sports courses and activities for taxpayers and their dependents of up to HK$12,000 per person,” said Sarah Chan FCPA, chair of the Taxation Faculty Executive Committee. “We also recommend increasing the maximum tax deduction for qualifying premiums paid under the Voluntary Health Insurance Scheme from HK$8,000 to HK$12,000, and that consideration be given to extending the scope of the scheme to other kinds of programmes, such as outpatient services,” she explains.


“With a view to encouraging working people to save more and earlier for their retirement, we recommend an increase in the maximum tax deductible amount of voluntary contributions to individual mandatory provident fund schemes, from HK$60,000 to HK$100,000 per year. This together with the ending of the offsetting mechanism”, should also help reduce the burden on social welfare funding in the longer-term,” Ms. Chan adds.


Given the latest situation with the recent electricity price rises, the Institute suggests the government provide electricity subsidies, at least to those most in need, while coupling this with measures to promote energy conservation.


In relation to arts, culture and sports development and tourism, the Institute suggests supporting more international arts, cultural and sports events and exchanges, to showcase Hong Kong’s global perspective, as well as fostering the development of a vibrant local arts and culture scene. Further, it calls on the government to focus more on higher-end and eco-tourism, not only mass market tourism, in preparation for the full opening of the borders.


Measures to achieve carbon neutrality and sustainability goals


The government has committed to achieving carbon neutrality by 2050. Hong Kong's Climate Action Plan 2050, issued in October 2021, sets out the vision of "Zero-carbon Emissions-Livable City-Sustainable Development" and, as an interim measure, targets to reduce total carbon emissions by 50% before 2035. As noted by the chief executive in the 2022 Policy Address, it is imperative that Hong Kong steps up decarbonisation efforts. As he also highlighted, over 60% of our carbon emissions are attributable to generating electricity for buildings.


“Against this background, we propose accelerated industrial and commercial building tax allowances for ‘green’ and energy-efficient buildings. Further, we propose extending these building allowances beyond their current 25-year limit, for refurbished buildings that adopt more sustainable features,” Ms. Chan explains.  


Besides these proposals, the Institute suggests incentives to expedite the replacement of older polluting commercial vehicles and the expansion of electric vehicle charging facilities in carparks. Meanwhile, businesses should be encouraged to reduce their carbon emissions, including, where appropriate, by offsetting. Tax deductions should be provided for the costs incurred on purchasing properly certified, renewable energy credits or carbon credits. 


The full budget proposal "Reconnect and Renew" is available here.



Ms. Loretta Fong CPA, President of HKICPA (Centre), Mr. Eugene Yeung CPA, Convenor of Budget Proposals Sub-Committee (Left) and Ms. Sarah Chan FCPA, Chair of Taxation Faculty Executive Committee (Right) presented the HKICPA’s 2023-24 Budget Proposals “Reconnect & Renew”, which includes a range of recommendations under three main headings.




香港會計師公會(「公會」)今天就2023-24財政年度的稅收政策和財政預算案提出建議。公會以《重新接軌  再譜新篇》為題,分為三個主要部份提出一系列建議,包括(一)提升香港國際地位和競爭力、(二)使香港成為更宜居的城市及相關社區支援措施,以及(三)實現碳中和及可持續發展目標的環境保護措施。公會就提高香港的競爭力及在後疫情時代全球競爭中吸引海外投資和人才提出建議,呼籲政府為國際企業和個人提供具體的誘因和優惠;為企業和市民推出針對性支援措施,克服因經濟復甦而帶來的挑戰和阻力;同時採取必要的行動,致力爭取香港於2050年前實現碳中和。




















中小企業繼續在香港經濟中扮演重要角色。現時有超過 350,000 間中小企業,佔商業機構的 98% 以上,僱用了私營機構就業市場約 45% 的勞動力。 他們的活力和業務表現有助於推動香港經濟。公會希望其數碼轉型獲得更多支持,包括為中小企業提供為期約 36 個月的資助,聘請資訊科技專才。資助也可用於幫助中小型企業聘請會計師以協助升級其會計系統,為目前政府正在開發並即將全面引入的利得稅電子報稅做好準備。公會亦建議設立新基金或擴大現有進修基金,涵蓋資訊科技和數碼業務的商業實踐培訓。


「為幫助吸引更多投資,我們亦促請政府為納稅人提供更大的確定性。」楊澤志先生提出。 「在香港實施有關國際稅務的重大發展項目,如「稅基侵蝕及利潤轉移」(「BEPS」)  2.0 方案,以及對大型跨國企業實施全球最低稅率,均引發了許多實際問題。政府應儘早諮詢主要持份者,並為直接受法規修訂影響的人士提供明確的指導和支持。此外,鑒於近年來有頗多與稅收相關的修例,對香港的公共財政支出有更大的需求,加上其他的財政挑戰,公會繼續倡議對香港的稅制進行更全面的檢討。」




香港的醫療體系整體上擁有良好聲譽,以質素、效率和廣泛的社區覆蓋而著稱。然而,漫長的輪候時間,以及疫情期間公立醫院不勝負荷的情形,突顯香港公立醫院嚴重的人手短缺問題。「公會認為應鼓勵社區培養更積極及健康的生活方式,長遠而言將有助於減輕公共衛生系統的負擔;同時鼓勵更多使用私營醫療服務。因此,我們建議政府為納稅人及其受養人所支付的認可運動課程和活動的費用提供每人最高 12,000 港元的免稅額。」公會稅務師會執行委員會主席陳嘉華資深會計師指。「公會亦建議將根據自願醫保計劃支付的合資格保費的最高免稅額從 8,000 港元提高至 12,000 港元,政府還應考慮將該計劃範圍擴大至門診等其他類型的服務。」


「為鼓勵在職人士及早為退休儲蓄,我們建議將個人強積金計劃的自願性供款的可扣稅上限由每年60,000港元提高至100,000港元。 連同取消強積金「對沖」安排,將長遠有助於減輕社會福利資金的負擔。」陳嘉華女士補充。














《重新接軌  再譜新篇》2023/24預算案提出的建議全文已上載至此網站。(只有英文)




香港會計師公會會長方蘊萱會計師(中)、香港會計師公會財政預算案建議委員會召集人楊澤志會計師(左)及公會稅務師會執行委員會主席陳嘉華資深會計師(右)介紹香港會計師公會 2023-24 年預算案建議「重新接軌  再譜新篇」,其中三個主要部份下的一系列建議。