Today, the Hong Kong Institute of Certified Public Accountants (“HKICPA”) has announced its tax policy and Government’s budget proposals for the 2024-25 fiscal year. Under the theme “Reinvigorate & Reinvent Hong Kong”, HKICPA puts recommendations forward to the Hong Kong Government under four key themes to retain Hong Kong’s vibrancy and attractiveness to investors and talents, as well as re-energise its status as a leading international financial centre.

HKICPA estimates that the fiscal deficit for 2023-24 will reach around HK$127.3 billion, slightly more than the updated forecast by the Government last month, and more than double the original forecast, as a result of lower land sales in the fiscal year and slower economic growth than originally expected, with lower stamp duty income from stock market and property transactions. “Hong Kong continues to face head winds and uncertainties internationally. The successive interest rate hikes by developed economies and ongoing geopolitical tensions, coupled with the talent shortage and an ageing population among other factors, have all added to the challenges faced by Hong Kong,” said Roy Leung FCPA, President of HKICPA. “While the measures launched by the Government last year to attract investment and talents, and to stimulate consumption have generated positive results, more can still be done to help Hong Kong maintain its vibrancy and attraction as a place to invest, live and work.”

Mr. Leung continues, “We should also review Hong Kong’s branding, investment promotion strategies, tax policies, as well as our overall competitiveness, in order to energize our status as a leading international financial centre and world city.”

Aimed at helping to reinvigorate Hong Kong, the HKICPA’s budget proposals include a wide range of measures under four main themes - covering stimulating investment, attracting and retaining talent and fostering innovation, supporting the wellbeing of the community and promoting sustainability, as well as reforming the tax system. Priority areas for investment to boost the economy include innovation and technology (“I&T”), research and development (“R&D”) and intellectual property (“IP”)-related business.

“In the present economic environment, while we appreciate the need to control expenditure and save costs, where possible, there are strong grounds for reviewing the competitiveness of our tax system, as well as looking at possible non-tax incentives for investment, and exploring other possible sources of revenue,” says Eugene Yeung, CPA, Convenor of the HKICPA’s Budget Proposals Task Force. “We agree with the Financial Secretary, who said in his Blog that ‘in the long run, the key to increasing government revenue lies in vibrant economic development,’ and that ‘we need to grow the economic pie’. Growing the economy is the aim of many of the measures that we have put forward in our submission, even though, in the short-term, this may result in foregoing some revenue”.    

Attracting investment and talent, and promoting the Hong Kong brand

In addressing economic challenges, Hong Kong should look to boost its ranking in terms of global competitiveness. From a branding perspective, HKICPA believes the Government needs to reiterate its strong commitment to maintaining an investment-friendly environment, including the free flow of capital, linked exchange rate system, common law system and independent and impartial judiciary, among other related factors. It is important to promote Hong Kong as a vibrant, modern, sustainable and diverse community, and to tell the world the good stories of Hong Kong as a place where people of all backgrounds have been able to thrive and succeed.

The Institute highlights the need to conduct streamlining business processes, simplifying and digitalizing business licensing arrangements, where possible; looking closely at listing procedures, to facilitate more initial public offerings from a range of companies, while safeguarding corporate governance standards; introducing a corporate rescue regime and reinforcing Hong Kong’s English and Putonghua language skills.

To support the regional headquarters economy, in line with the initiative announced in the Chief Executive’s 2023 Policy Address, HKICPA proposes that the Government consider offering a 50% tax concession for relevant profits derived by qualifying regional headquarters. Group loss relief is another measure that would be welcomed by group companies which is available, in some form, in a number of major jurisdictions.    

To support local innovation and entrepreneurship, HKICPA proposes incentives such as capped concessions for company setting-up expenses for standalone start-ups. It also suggests that the Government consider tax credits, with a lower profits tax rate for the first three years of profits, for start-ups in targeted industries, such as information technology (“IT”) and green industries. More generally, HKICPA suggests reviewing the two-tier profits tax regime and, potentially, either raising the threshold for the concessionary tax rate of 8.25% to above the current first HK$2 million of profit, or adjusting the tax rate downwards.

On the issue of attracting and retaining talent, HKICPA says that the Government should consider providing subsidies or tax concessions, such as double deductions, to targeted industries facing talent shortages to enable employers to offer more competitive salaries. Overseas talent should be offered a child education allowance, to encourage them to raise their families in Hong Kong.    

In view of Hong Kong’s declining birth rate and an ageing population, and the resulting constraints on the workforce, HKICPA recommends measures to encourage childbirth. These include supporting employers to offer more flexible, family-friendly policies, e.g., allowing new parents to work from home in the first two years after the birth of a child, or, where this is not practicable, subsidizing the cost of a helper or childcare services for two years after childbirth. Given people’s longer lifespans, employers should also be incentivised, for example, by providing enhanced tax deductions for hiring experienced workers and skilled retirees.

R&D, IP-businesses and digitalization

One of the roles envisaged for Hong Kong under the 14th National Five-Year Plan is an IP trading hub, which is closely linked to the development of I&T and R&D in Hong Kong. “The Government can consider R&D tax credits for start-up businesses, which are quite common overseas. We also recommend making the rules for the existing tax incentives, such as the enhanced R&D tax deductions of up to 300% of relevant expenditure, more flexible and business friendly”, says Sarah Chan, FCPA, Chair of Taxation Faculty Executive Committee. “Other jurisdictions in the region are vying for the same business, so there needs to be scope for greater flexibility in how our rules are applied in order to remain competitive,” adds Ms. Chan.  

To enhance the overall digital transformation in the business community, HKICPA suggests subsidizing small and medium enterprises (“SMEs”) to engage an IT professional for up to 3 years to help them upgrade their systems, equipment, and technical infrastructure. This could include engaging a suitable accountant to help them upgrade their accounting systems in readiness for the introduction of a mandatory tax e-filing regime. In addition, HKICPA makes recommendations on funding practical training in I&T and digitalization, as well as artificial intelligence and data analytics.

Build a happier and healthier community in a greener Hong Kong 

To promote a healthier and more active lifestyle among the community and relieve pressure on the public healthcare system, HKICPA proposes to provide a tax deduction of up to HK$12,000 per person for expenses on approved sports courses and activities for taxpayers and dependants. Also, it is proposed that the maximum tax deductions under the Voluntary Health Insurance Scheme (“VHIS”) could be increased to HK$12,000, and consideration given to extending the coverage scope of VHIS to other programmes, such as outpatient services.

The Institute calls for more support for the development of a vibrant and creative local arts culture scene and a wider range of sports events to promote international exchanges, which can help boost tourism as well as benefiting the local community

To provide some relief for middle-class and other taxpayers, the Government should consider providing a tax reduction of 100%, subject to a ceiling of HK$12,000 on salaries tax, tax under personal assessment and profits tax for 2023-24. Additionally, basic personal allowances should be increased, at least in line with inflation, alongside a general review of the allowances for dependants. Furthermore, given the high interest rate environment and rising rental costs, the home loan interest deduction/ rental allowance should be increased to HK$110,000 annually. Certain rates waivers and electricity subsidies are also proposed.

Regarding sustainable development, the Government is committed to achieving carbon neutrality by 2050 and has set interim targets to reduce carbon emissions by 50% before 2035. Major new infrastructure projects should take these targets on board, in terms of designs, materials and processes, etc. HKICPA also recommends various specific measures in relation to electric vehicles (“EVs”) and green public transport, including retaining the first registration tax concessions on electric private cars and expanding charging facilities; on energy-efficient buildings, including incentivizing construction of buildings that meet higher energy-efficiency standards; and on green finance, such as allowing tax deductions for companies purchasing carbon credits as part of their carbon reduction strategy.

As the future standard setter for sustainability reporting standards in Hong Kong, HKICPA emphasizes the importance of capacity building through recognized education courses and certifications in ESG and sustainable finance.

Building on our strengths – Reassessing Hong Kong’s tax system

In addition to a low-rate and relatively simple tax regime, certainty of tax treatment has been another important factor of the tax system affecting Hong Kong’s attraction as a place of investment for multinational enterprises. HKICPA continues to call for a broader review of the tax system to improve certainty, ensure the overall competitiveness of the regime, and explore options to ensure Hong Kong’s public finances remain secure and sustainable in the long-term.

To download the full budget proposal "Reinvigorate and reinvent Hong Kong ", please visit the following link:

https://www.hkicpa.org.hk/-/media/Document/APD/Gov-Budget/Budget-proposals-2024-25_submn.pdf

^{Mr. Roy Leung FCPA, President of HKICPA (Centre), Mr. Eugene Yeung CPA, Convenor of Budget Proposals Task Force (Left) and Ms. Sarah Chan FCPA, Chair of Taxation Faculty Executive Committee (Right) presented the HKICPA’s 2024-25 Budget Proposals “Reinvigorate and reinvent Hong Kong”, which includes a range of recommendations under four key themes.} 

^{Aimed at helping to reinvigorate Hong Kong, the HKICPA’s budget proposals include a wide range of measures under four main themes for attracting investment and talents to boost the economy.}

香港會計師公會就政府財政預算案提出建議

振興香港國際都會地位 吸引投資與人才

香港會計師公會（「公會」）今天就2024-25財政年度的稅收政策和財政預算提出建議。公會以《振興香港  重塑輝煌》為題，向香港政府提出四大主題建議，期望保持香港的活力和對投資者及人才的吸引力，並鞏固本港的領先國際金融中心地位。

香港會計師公會估計，2023-24財政年度的財政赤字將達到1,273億港元，雖僅略高於政府上月更新的預測數據，但為政府原來預測的超過兩倍，這是由於本財政年度賣地收益減少、經濟增長速度遜於預期、股票市場及樓宇交易印花稅收入減少所致。香港會計師公會會長梁思傑資深會計師表示：「香港繼續面臨國際上的挑戰和不確定性。已開發經濟體持續加息和地緣政治緊張；人才短缺加上人口老化等，進一步加劇香港所面對的挑戰。政府去年起，積極推出不同的吸引投資和人才措施，已取得了一定成效，但香港未來還須更有作為，保持作為適合投資、生活及就業的城市的活力與吸引力。」

梁思傑續指：「香港亦需要檢視其品牌形象、投資推廣策略、稅務政策以及我們的整體競爭力，為鞏固作為領先的國際金融中心及國際城市的地位注入動力。」

公會的預算案建議旨在幫助振興和重塑香港，在四大主題下提出多元化的措施建議，涵蓋刺激投資、吸引和留住人才、鼓勵創新、支援建設更健康社區、推動可持續發展以及改革稅務制度等，並積極吸引更多投資，尤其在創新科技、研發和知識產權相關業務領域，以提振經濟。

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表示：「在目前的經濟環境下，雖然我們理解控制開支和節省成本的必要性，但有充分理由重新審視整體稅制的競爭力，以及考慮非稅收的投資激勵措施，並探索其他可能的收入來源。我們同意財政司司長在網誌中提到『長遠而言，增加收入的關鍵在於經濟發展蓬勃』以及『把香港經濟的蛋糕做大』。這與我們的建議目標一致，儘管該等措施可能會導致短期的收入有所損失。」

吸引投資和人才 推廣香港品牌

在應對經濟挑戰方面，香港應著重提升其全球競爭力。在品牌形象策略方面，公會認為政府應致力維持香港的良好營商環境，包括資本自由流動、聯繫匯率、普通法制度、獨立公正的司法以及其他相關因素。同時，推廣香港作為一個充滿活力、現代化、具備可持續性和多元化的社會亦十分重要，向世界說明香港可讓不同背景的人士發展並取得成功。

公會認為有需要進行簡化本港商業營運的程序，包括盡可能簡化及數碼化業務牌照安排。此外，公會建議密切審視上市程序，以促進更多不同類型的企業在香港上市同時維護企業管治標準，引入企業救援制度，並加強香港的英語及普通話語言能力。

公會建議政府考慮對合資格地區總部的相關利潤給予50%的稅務優惠，這與行政長官《2023年施政報告》中提出支持地區總部經濟的倡議一致。同時，不少司法管轄區均有提供一定程度的集團虧損稅務寬免制度，亦是另一個普遍受到企業歡迎的措施，公會亦建議政府可考慮實行。

為了支持本地創新，香港會計師公會建議政府考慮提供稅務優惠，例如對獨立初創公司的公司成立費用給予有上限的稅收減免。 此外，政府亦可考慮向特定產業，例如資訊與科技和綠色產業等的初創公司提供稅收抵免和對首三年利潤徵收較低利得稅。此外，公會建議檢視利得稅兩級制，當中可考慮提高現時首二百萬港元的應評税利潤得到優惠稅率的限額，或調低現行的8.25%稅率。

針對吸引及留住人才，公會認為政府應考慮向人才短缺的特定行業提供補貼或稅收優惠，例如雙重稅務扣減，讓僱主能夠提供更具競爭力的薪酬。此外，應向海外人才提供子女教育津貼，以鼓勵人才留港建立家庭。

鑒於香港出生率下降及人口老化為勞動力帶來影響，公會建議政府採取措施鼓勵生育。這些措施包括支持僱主推出更多具彈性的家庭友善政策。例如，允許新生兒父母在孩子出生後的首兩年在家工作，或補貼首兩年的保姆費用。 隨著人口壽命延長，政府也應鼓勵僱主聘請資深員工及具技術的退休人士，包括提升扣稅額。

研發、知識產權業務和數碼化

知識產權貿易樞紐是國家「十四五」規劃為香港定位的角色之一，需要香港的創科和研發全面發展來配合。 公會稅務師會執行委員會主席陳嘉華資深會計師表示：「政府可考慮參考其他國家做法，為初創企業提供研發稅收抵免。同時，我們建議修改現行的稅務優惠措施，例如有關研發開支的額外稅務扣減上限增至有關開支的300%，並更具彈性與營商友善。」她續指：「其他區內的司法管轄區正爭相招攬初創企業和研發業務。因此，我們的稅務規則應用方式需要具備更大的靈活性以保持競爭力。」

為推動商界的整體數碼化轉型，公會建議政府資助中小型企業聘用資訊科技專業人員，上限為三年，以協助其系統、設備和技術基礎設施升級。措施可包括聘請合適的會計師協助升級會計系統，為引入強制性電子報稅系統做好準備。公會也建議政府資助創科、數碼化、人工智能和數據分析的實務培訓。

創建綠色香港以建立更愉快及健康社區

為提倡在社區建立更健康和積極的生活方式，減輕公共醫療系統壓力，香港會計師公會建議政府為納稅人及其家屬的合資格體育課程和活動的費用提供免税額，每人最高 12,000 港元。此外，公會建議將自願醫保計劃支付的合資格保費的最高免稅額提高至 12,000 港元，並考慮將該計劃的範圍擴大至門診服務等其他類型的計劃。

公會呼籲政府繼續支持有活力、創意的本地藝術文化活動以及多元化體育活動，以促進國際交流，藉此振興旅遊業並對本地社區帶來裨益。

為減輕中產及其他納稅人負擔，政府應考慮寬減2023-24課税年度百分之百的利得税、薪俸税及個人入息課税，上限為12,000港元。此外，基本免稅額的增加幅度應至少與通脹率持平，並檢視供養人免稅額。此外，鑒於高息環境及租金成本上升，居所貸款利息/租金的稅項扣除上限亦應增至每年至少11萬港元。公會亦提議豁免一定數額的差餉和提供電費補貼。

可持續發展方面，政府承諾在2050年實現碳中和，並設定了2035年前將碳排放減少50%的中期目標。新的主要基建項目亦應在設計、物料使用及建造過程等範疇考慮以上目標。公會亦在電動車及綠色公共交通工具上提出多項建議，包括繼續寬減一般電動私家車的首次登記稅及增加充電設施。在節能建築方面，建議包括鼓勵建築符合更高的節能標準；在綠色金融方面，建議包括容許企業在購買碳信用額時，可獲稅務扣減。

作為未來香港的可持續匯報準則制訂者，香港會計師公會強調通過認可的ESG和可持續金融教育課程和認證以提升相關能力的重要性。

提升優勢—重新評估香港稅務制度

除了低稅率及簡單稅制之外，稅務處理的確定性是影響香港吸引跨國企業投資的另一重要因素。公會繼續提倡就稅制進行更廣泛的檢視，以確保制度的整體競爭力，並探討可行方案，以確保香港公共財政長遠維持穩健及具可持續性。

下載 《振興香港  重塑輝煌》2024/25預算案提出的建議全文（只有英文）
https://www.hkicpa.org.hk/-/media/Document/APD/Gov-Budget/Budget-proposals-2024-25_submn.pdf

^{香港會計師公會會長梁思傑資深會計師（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）及香港會計師公會稅務師會執行委員會主席陳嘉華資深會計師（右）介紹公會 2024/25 年預算提案《振興香港  重塑輝煌》其中四個主要部份下的一系列建議。}

^{香港會計師公會的預算案建議，旨在幫助振興和重塑香港，在四大主題下提出多元化的措施建議積極吸引更多投資與人才，以提振經濟。}