search icon cross white
spacer bookmark cross
search icon
Search Tags

  Total: Bookmarks

 Bookmark(s) Click icon to add bookmark(s) to my profile

  •  Local Bookmark is Empty

 User Profile Bookmark(s)

  •  Profile is Empty
bookmark cross white
search icon cross white
search icon
Search Tags

忘記密碼/使用者名稱 重新發送啟動電郵 註冊帳號 幫助網絡登錄

HKICPA advances recommendation for the government’s budget preparing for the recovery

20 January 2021

 (HONG KONG, 20 January 2021) Today, the Hong Kong Institute of Certified Public Accountants (“HKICPA”) has announced its tax policy and budget proposals for 2021-22. Under the theme "Preparing for the recovery", a range of 21 different measures were suggested to prepare for the recovery, enhance public finance and taxation, help citizens and businesses to adapt to the “new normal” through more extensive digital transformation, as well as environmental measures to improve the local environment and citizens’ well-being. 

HKICPA estimates that the fiscal deficit for 2020/21 will reach HK$348 billion for the year. Fiscal reserves are expected to stand at HK$812 billion. “Hong Kong’s economy is facing various domestic and external challenges. Like many other jurisdictions, the near-total disruption to lives due to the COVID-19 pandemic and the related restrictions on travel, have had a significant impact on the economy, resulting in the high unemployment rate and budget deficit. Other challenges ranging from the outmoded tax system, the US-China trade war, the need for faster digital transformation in light of the ‘new normal,’ and the pressure on public finances, indicate an urgent need for the government to respond,” said Mr. Raymond Cheng, President of HKICPA.

Preparing for the recovery

The unemployment rate for the three months ending December 2020 reached 6.6%, the highest in nearly 16 years. To fight the pandemic and support the economy, the government has announced four rounds of Anti-epidemic Fund measures, but there have only been two rounds of the Employment Support Scheme. 

“More should be done to support employment and the economy now, through creating jobs in both the public and private sectors, and accelerating the scheduled infrastructure/construction projects to create demand,” said Mr. Cheng. 

In respect of helping graduates to enter the job market and ensuring the existing workforce is sufficiently skilled to benefit from the digital transformation, the Institute suggested the government provides salary subsidies to employers for hiring graduates and career transition assistance to eligible people.

Public finance and taxation

The COVID-19 pandemic has revealed the weaknesses of the existing tax system amid the economic turmoil. The record government deficit predicted for 2020-21 is a consequence of its anti-epidemic fund spending supporting the economy as well as the lower revenue estimates due to the downturn in the economy.   

HKICPA has been highlighting the importance of conducting a holistic review of the Hong Kong tax system for the past several years. “A review of public finance revenue model has become even more pressing after developments in 2020,” said Mr. Eugene Yeung, Convenor of Budget Proposals Sub-Committee.

2020 also saw progress, albeit slowed by the pandemic, towards agreement in international taxation through the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting 2.0 project. This will likely require adjustments to the Hong Kong tax system. As a low tax jurisdiction, Hong Kong must ensure that it collects the “top-up tax” levied under these rules. Otherwise, other tax jurisdictions will collect the top-up tax in this zero sum game. “The government should ensure that its tax system is fit for the future, and that Hong Kong continues to be an attractive location for international businesses’ regional headquarters,” said Mr. Yeung.

Adapting to the new normal through more extensive digital transformation 

The pandemic has shown the world the importance of investing in technology and infrastructure that support peoples’ abilities to work from home. One positive consequence of this is the acceleration of the digital transformation of businesses. However, some small and medium-sized enterprises (SMEs) may not be able to afford the cost of digital transformation and effective cybersecurity. 

“Hong Kong’s SMEs in particular are a key part of the economy and may need more assistance to adapt to the digital environment and the new normal. To help SMEs and the business community, the government should consider developing a public cloud infrastructure, upgrading the existing e-government services, and educating the public and SMEs about cybersecurity matters,” said Mr. William Chan, Chair of the Taxation Faculty Executive Committee.

It is important for Hong Kong’s future that everyone has access to technology. Access to the internet has been vital for students to continue learning while schools have been closed. HKICPA recommended that the government supports needy families by subsidizing their internet subscription plans.

Environmental measures 

Concerns about environmental degradation and climate change have been given greater impetus worldwide in recent years. Sustainability and eco-friendly activities are also becoming increasingly important considerations for Hong Kong. HKICPA suggested that the government should make use of the Computer and Communication Products Recycling Programme and distribute refurbished second hand computer devices to needy students. It should consider introducing some tax and non-tax measures based on the “polluter pays” principle.

The government has recently announced its aim to achieve carbon neutrality before 2050. Improving the local air quality can also help improve people’s lives. “To help with improving the local environment, and the quality of life of Hong Kong’s citizens and to reduce the use of fossil fuels, the government should consider measures to promote the usage of electric vehicles and replacing aged commercial vehicles with more efficient models,” says Mr. Yeung.

The HKICPA Hong Kong tax policy and budget proposals 2021-22 "Preparing for the recovery" are available at




香港會計師公會就政府財政預算案提意見 為經濟復甦作準備