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HKICPA finds 2019-2020 Budget reasonable amid challenges

27 February 2019

(Hong Kong, 27 February 2019) Hong Kong Institute of Certified Public Accountants (HKICPA) believes that the 2019-2020 Budget shows the financial secretary (FS) adopting a fairly prudent approach to managing expenditure overall in order to meet the community’s expectations while seeking to solidify the city’s position as a financial service centre, strengthening its role in innovation and technology, and diversifying the economy.


HKICPA understands the challenges the government was facing in preparing for this year’s Budget and finds it reasonable amidst the continuing global economic uncertainty, brought about by the lingering China-US trade conflict and expectations of slower global growth. However, HKICPA believes that there is room for certain more specific tax-related measures to be introduced.


Early in the Budget speech, the FS highlighted the slowdown in Hong Kong’s fourth quarter GDP growth, as a result of external factors, and the weakened business sentiment in Hong Kong. Looking ahead, he also painted a cautious picture of the local economy with growth forecasts of 2-3 per cent in 2019-20 and beyond.


The reallocation of Housing Reserve, established in 2014 to support public housing development, back to the fiscal reserves, over the next four years, will boost medium-term surplus forecasts. “Without this, the Budget could slide into deficit for a year or two, particularly in the event of further negative headwinds. However, the FS is forecasting a surplus of HK$16.8 billion in the consolidated account in the coming year, which means that fiscal reserves are estimated to reach about HK$1.2 trillion by the end of March 2020, equivalent to 39.4 per cent of GDP; so barring any further major shock, Hong Kong’s financial standing should remain in a good shape,” said Mr. KK So, Chairman of HKICPA's Taxation Faculty Executive Committee.


"The FS announced that the Tax Policy Unit (TPU) would be moved directly under his office and will be given more resources, as and when necessary. We hope this means that the TPU will be looking at more strategic tax policy issues, including reviewing the effectiveness of our tax incentives," said Mr Curtis Ng, Convenor of the Budget Proposals Sub-committee, HKICPA.


While the TPU has yet to fulfil some of the expectations practitioners had of it when it was set up, to investigate certain more fundamental tax issues, HKICPA reiterates that the government should expand its remit and expertise to include taxation and industry experts, economists and academics, as well as government representatives. The TPU should study how taxation could help drive the economy, with the aim of achieving a more holistic system that balances the need to maintain a healthy revenue base, while supporting a strong economy and community.


The key tax concessions and rebates, such as profits and salaries tax rebates, and rates waivers, are a continuation of past years' measures, albeit reduced from last year's levels. The extra allowance to be granted to social welfare beneficiaries has been cut to one month’s top-up from last year’s two months’ extra. "In the past few years, personal tax rebates have helped relieve some financial pressure on the middle-class. But given the continuing unaffordability of residential property for many people, we have been advocating an additional allowance of up to HK$100,000 annually for rental payments by taxpayers on their primary residence. The FS suggested last year that something was in the pipeline, so many people will be disappointed to see no mention of this measure in this year's Budget," Mr. Ng explained.


As Hong Kong is now positioning itself as a tech innovation hub in addition to being an international financial centre, the government is committed to supporting research and development (R&D). Therefore, HKICPA urges the government to relax the rules for super deductions of R&D expenses to allow deductions for subcontracted R&D expenses.


HKICPA welcomes the government’s renewed commitment in the Budget towards improving the quality of life in Hong Kong by increasing recurrent funding for the public healthcare system, as well as funding for elderly services and social welfare facilities, in addition to capitalising on the harbourfront development and smart city blueprint, as part of its mission to make Hong Kong a more liveable city.


Last but not the least, HKICPA welcomes the government’s consideration of establishing a limited partnership regime and introducing tax arrangements to attract private equity funds to set up and operate in Hong Kong. This is in line with HKICPA's proposals to the government to enhance Hong Kong's role as fund management centre. The provision of tax concessions for marine insurance and underwriting of specialty risks, and to facilitate them to issue insurance-linked securities, should also help to promote Hong Kong as a ship leasing hub.


經濟環境多變 香港會計師公會認為財政預算案審慎合理






財政司司長在預算案演說初段,強調受外在因素及本港市場氣氛疲弱所影響,香港去年第四季的本地生產總值增長放緩。他亦對本港經濟預測表示審慎,預計二零一九/二零二零年及往後年度的增長為 2-3%。


二零一四年成立以支持公營房屋發展的房屋儲備金,將會分四年回撥到財政儲備中。中期盈餘預測因此有所提升。公會稅務師會執行委員會主席蘇國基先生表示:「此舉可避免政府的預算可能出現一至兩年的赤字,尤其當經濟進一步逆轉時。儘管如此,財政司司長預計來年會錄得 168 億港元的綜合盈餘,而財政儲備至二零二零年三月底預計約為 12,000 億港元,相當於本地生產總值 39.4%。除受到其他重大外圍衝擊,香港的財政狀況應能保持穩健。」






主要稅務寬減及寬免措施,例如利得稅,薪俸稅寬減和差餉寬免,都是延續以往年度的安排,然而寬減額則有所減少。向領取社會保障金額人士額外發放的金額,亦由去年的兩個月減至一個月。伍先生解釋說:「過往幾年的個人稅務寬減措施有助減輕中產人士部分財政壓力。但由於普遍市民住屋負擔沉重,公會建議政府就納稅人的主要居所租金支出提供每年最高 10 萬港元扣除額。司長去年曾提及相關措施已在處理中,但今年預算案則沒有涵蓋這議題,相信不少市民對此會感到失望。」