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A cautious maiden budget overall from the new financial secretary, but Institute welcomes implementation of its long-advocated initiative to set up tax policy unit

22 February 2017

(Hong Kong, 22 February 2017) The government's 2017-18 budget offers some immediate measures to stimulate the economy, helps boost growth to 2-3 percent in 2017, and provides support to the most needy in the community, which are to be expected given the large amount of surplus, according to the Hong Kong Institute of Certified Public Accountants.

 

While the focus remains on the pillar and creative industries, and innovation and technology, the Institute welcomes the additional attention given to reviewing tax policy.

 

Tax policy unit

 

"The establishment of the tax policy unit is a welcome move which the Institute has been advocating for a number of years," says Anthony Tam, chair of the Institute's taxation faculty executive committee. However, more information is needed about the composition as this will be crucial in driving the direction of tax policy.

 

"The unit should include taxation and industry experts, economists, academics, as well as representatives from the Financial Services and the Treasury Bureau, the Inland Revenue Department, and investment promotion agencies," says Tam.

 

"When it is developing proposals, the unit should communicate with and complement the work of other bodies, such as the Economic Development Commission. The unit should be able to invite specialists to join particular projects, and it could have a full-time, non-government head, similar to the arrangement for the Central Policy Unit," Tam adds.

 

In addition to the scope of work mentioned in the budget speech, the tax policy unit should also look at modernizing the Inland Revenue Ordinance, to accommodate new business models and to provide clarity of treatment. It should consider the impact of emerging international tax developments with a view to helping Hong Kong anticipate changes and position itself for these.

 

Economic measures

 

The Institute supports the proposals to consult on extending the profits tax exemption to onshore privately-offered open-ended fund companies. "We have argued for more flexibility in extending the existing offshore fund exemption to certain Hong Kong-resident funds, which would help make Hong Kong a more attractive location for the fund industry and create spin-off benefits in other sectors," says Curtis Ng, convenor of the Institute’s budget proposals sub-committee.

 

While the financial secretary mentions that the tax policy unit will explore enhanced tax deductions for innovation and technology expenditure, "We recommended that innovation and technology start-up companies should enjoy a 10% corporate profits tax in the first two years that they generate assessable profits," says Ng. "These days, it is quite common for start-ups in the I&T field in other jurisdictions to be offered a reduced rate of profits tax or even a tax holiday in their early years."

 

The Institute also saw scope for more concrete measures to help SMEs generally such as a lower rate of profits tax.

 

Meanwhile, the plan to introduce legislation for tax concessions to support the further development of the aircraft leasing business in Hong Kong is welcomed.

 

The commitment to expanding the network of comprehensive avoidance of double taxation agreements is seen as another positive signal in the budget.

 

Community measures

 

The government proposes to extend the entitlement period for tax reduction for home loan interest to 20 years of assessment, which is helpful given that mortgages often extend beyond 15 years, but more could be done. "Many people, especially young people, still cannot envisage a time when they will be able to afford to buy their own homes. That's why the Institute's budget submission recommended allowing a deduction for rental payments for a taxpayer's primary residence, with an annual cap of HK$100,000," explains Ng.

 

The government says it will provide a tax deduction for the purchase of regulated health insurance products, which is in the right direction but more details are needed. "To encourage more efficient use of public and private health care services, we recommended allowing a deduction for private health insurance premiums, with an annual cap of HK$12,000, and additional deductions for premiums paid to cover dependent spouses and children," says Ng.

 

The Institute also supports the measures on sports development, although these are mainly to provide the funding for new sports facilities, as announced in the chief executive's policy address. On the other hand, facilities are only one part of the equation and the Institute recommended a deduction for expenditure on children's sports training courses, with an annual cap of HK$12,000. "This could encourage a more active lifestyle, which is good for the long-term physical and mental well-being of the community," Ng adds, following a recent Chinese University of Hong Kong's study, which found that Hong Kong children do not get sufficient exercise.

 

The gradual increase in salaries tax allowances for disabled dependants and dependent siblings is also welcomed by the Institute, which, in its submission, pointed out the big disparity in increases between the allowances for different dependants in recent years. We recommended that the basis for the adjustments in these allowances should be rationalized and made more transparent, and, generally, that the increases be aligned in future, Tam explains.

 

 

新財政司司長的首份預算案整體審慎

而公會歡迎成立其長期倡導的稅務政策組

 

(香港,二零一七年二月廿二日) 香港會計師公會指出,政府二零一七至一八年的財政預算案提供即時措施,刺激經濟,有助提升 2017 年的增長,帶來 2-3%的提振作用,並為社會上最有需要的一群提供支援。由於今年錄得巨額盈餘,這些措施都是預期以內的事。

 

儘管財政預算案的焦點仍然是支柱及創意產業,以及創新科技,公會歡迎預算案對檢討稅務政策有所著墨。

 

稅務政策組

 

公會稅務師會執行委員會主席譚振雄先生表示:「公會多年來倡導成立稅務政策組,欣然樂見其有所發展。」然而,我們必須知道其組成的細節,因為這對推動稅務政策的方向很重要。

 

譚先生說:「稅務政策組應包括稅務及業界專家、經濟學者、學術界人士,以及財經事務及庫務局、稅務局及投資推廣機構的代表。」

 

譚先生續說:「稅務政策組在制訂建議時,亦應與其他機構如經濟發展委員會溝通,完善他們的工作。政策組應可以在特定的項目中,邀請相關專家加入。它的主管可以是全職、非政府人員,安排情況應與中央政策組相似。」

 

除了在財政預算案所提到的工作範圍外,稅務政策組亦應檢討是否需要把《稅務條例》現代化,以適應新的商業模式和更清晰地處理稅務事宜。政策組應考慮國際稅務新發展的影響,以便協助香港預備有關的轉變和相應地作出新定位。

 

經濟措施

 

公會支持把利得稅豁免的範圍擴大,涵蓋在岸以私人形式發售的開放式基金型公司的諮詢建議。公會財政預算案建議委員會召集人伍耀輝先生表示:「我們爭取更大的靈活度,擴大離岸基金的稅務優惠至特定的香港本地基金,這有助香港對基金業的吸引力,並為其他行業帶來衍生的益處。」

 

財政司司長提及稅務政策組會探討提升給予創新科技開支的稅務扣減,而伍先生說:「我們建議對創新科技界的初創企業,在他們獲得可課稅盈利的首兩年,享有 10%的利得稅率。現時,在其他國家及地區,讓創新科技界的初創企業在創立的首數年,獲減低利得稅率或享有稅務假期,是很平常的事。」

 

公會亦認為可以對一般中小企提供更實在的扶助措施,如較低的利得稅率。

 

同時,公會歡迎計劃引入稅務優惠的立法工作,以進一步支持香港航空租賃業的發展。

 

財政預算案另一個正面訊息,就是承諾擴大全面性避免雙重課稅協定的網絡。

 

民生措施

 

政府建議延長居所貸款利息扣除年期至 20 個課稅年度,對民生有所幫助,因為按揭一般長過 15 年,但政府可以做得更多。伍先生解釋說:「很多人,尤其是年輕一族,仍未知道何時才有能力購置居所,所以公會在其財政預算案建議案中,提出容許納稅人的自住居所的租金支出可作稅務減免,以每年 100,000 港元為上限。」

 

政府表示會就購買受規管醫保產品的市民提供稅務扣減進行研究,這措施方向正確,但須提供更多詳情。伍先生說:「為鼓勵更有效使用公私營的醫療服務,我們建議容許納稅人的私人醫療保險供款作稅務扣減,上限為 12,000 港元。如納稅人為受養配偶或子女繳付醫療保險費,可獲得額外扣減。」

 

公會歡迎政府支援體育發展的措施,儘管這些主要是為行政長官在施政報告中提到的新體育設施提供資金。另一方面,設施只是體育發展的一部分,公會建議容許兒童體育訓練課程的支出可作稅務減免,以每年 12,000 港元為上限。伍先生補充說:「這可鼓勵積極的生活方式,對市民的長遠身心健康有所裨益。」最近香港中文大學的一項研究指出,香港兒童沒有做足夠的運動。

 

公會亦歡迎薪俸稅中對傷殘受養人和供養兄弟姊妹的免稅額逐步提升。公會在預算案建議案中指出,近年不同受養人免稅額的增幅差距很大。譚振雄先生說,公會建議這些免稅額的調整基礎必須有理據支持、應更加透明,且增幅應大致保持一致。

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