HKICPA makes recommendations for the government’s budget to reconnect Hong Kong with the international community and enhance its competitive edge
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。
香港會計師公會估計，繼第五波疫情打擊造成的經濟疲軟和地產市場普遍不景氣，2022/23年度的賣地減少，包括近期赤柱一幅大型土地流標，導致2022-23年度的財政赤字將達到1,139億港元，較政府原先估計的563億港元高出超過兩倍。香港會計師公會會長方蘊萱會計師表示：「受全球經濟前景不明朗影響，我們預計2023年香港將繼續面臨各種挑戰。世界銀行《全球經濟展望報告》預計今年全球經濟增長僅1.7%，加上俄烏衝突持續、許多經濟體受高通脹影響以及利率上升等。我們預計香港的財政儲備在2023年3月底將跌至8,432億元。」
方蘊萱女士續指：「後疫情時代仍然充滿變數。全球經濟不確定性、中美關係緊張、地緣政治衝突，以及人才流失等內在限制持續影響香港經濟，進一步拖慢復甦。政府近日下調2022年全年本地生產總值增長預測至3.2%，反映香港明顯需要額外推動力。為了應對以上挑戰，公會建議政府採取一系列措施，填補香港的競爭優勢，使香港成為更宜居的城市，並為企業和個人提供有利的稅收制度，創造良好的生活和工作環境。為了做到以上幾點，香港在實現可持續發展目標和改善環境相關的表現方面亦需要付出更多努力。」
提升香港國際地位和競爭力
公會歡迎政府最近放寬防疫措施以加快復常步伐，並期望政府盡快取消其餘防疫政策，讓香港重整旗鼓並與國際重新接軌。
鑒於香港去年於全球金融中心的排名下跌，公會建議政府在現有的基礎上建立更有利的營商環境來吸引海外投資，例如為符合特定條件的地區總部公司提供50%的利得稅優惠，並引入簡單的集團虧損稅務寬免制度，鼓勵更多公司在香港設立地區總部。
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：「為把握大灣區的機遇，公會建議設立一個具靈活性的專項基金，專門為大灣區的專業服務企業提供商業推廣和發展支援，亦可用於實習計劃，並為大灣區的年輕專才提供就業機會，鼓勵專業人士為會計等嚴重人力短缺的行業工作。公會亦建議政府為香港專業人士在大灣區城市，特別是前海和南沙，提供更多支持。」
公會認為過去三年的檢疫及社交距離措施，以及不利的經濟條件，影響人才流入，加上人才的流失，造成了勞動力和人才短缺。為了吸引和留住人才，公會建議政府應深入研究人才流失的根本原因，以及鼓勵人才留下或回流香港的誘因。公會建議政府應為指定行業提供額外支援，使僱主能夠以更具競爭力的薪酬吸引人才，尤其是資訊科技、綠色產業、專業服務業等技術勞動力短缺的行業。此外，政府應考慮提供一些非稅務優惠，支持香港與大灣區之間的人才流動。
具體而言，為了鼓勵海外人才帶同家人來港長期發展，公會建議政府為他們引入全新措施，例如子女教育津貼。楊澤志先生表示：「鑒於香港的出生率處於低水平，公會亦建議採取家庭友善措施，鼓勵僱主在孩子出生後的一兩年內允許員工在家工作，或津貼員工聘請家傭或用於托兒服務的支出。」
配合國家「十四五」規劃，資訊科技產業有望成為香港未來關鍵行業之一。公會敦促政府通過審查和修訂相關的稅收政策，促進香港的創新和技術、研究與開發，以及知識產權的發展。例如，公會建議為新成立的資訊科技業務和綠色產業相關公司提供稅收寬免。同時，為符合條件的行業引入首五年應評税利潤按較低的稅率徵收利得稅（附加於現有對首200萬港元應稅利潤的稅務優惠之上），鼓勵為綠色經濟貢獻的行業，提高香港在可持續發展方面的表現。
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。」
使香港成為更宜居的城市和社區支援措施
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。
鑒於近期電價上漲，公會建議政府向有需要的市民提供電費補貼，並與推廣節能的措施相結合。
在文化藝術、體育發展和旅遊方面，公會建議支持更多國際文化藝術和體育活動與交流，展示香港的國際視野，並促進本地文化藝術的發展。此外，公會呼籲政府集中發展高檔及生態旅遊，而不僅是大眾化旅遊，為全面通關作準備。
達致碳中和及可持續發展目標的措施
政府承諾在2050年或之前達致碳中和。2021年10月發布的《香港氣候行動藍圖2050》以「零碳排放•綠色宜居•持續發展」為願景，而中期目標是在2035年前將香港的碳排放總量減半。正如行政長官在2022年施政報告中指出，香港必須加緊各項減碳行動。他亦強調，本港超過六成的碳排放來自建築物的用電設施。
「在此背景下，我們建議為綠色節能建築提供額外工商業建築物免稅額，並將擁有可持續發展元素的翻新建築的免稅額延長到25年以上。」陳嘉華女士解釋道。
除上述建議外，公會還建議採取措施鼓勵加快更換污染嚴重的商用車輛和擴大電動車充電網絡。同時，政府應鼓勵企業減少碳排放，包括在合適情況下採取碳抵銷政策。政府亦應為購買認可的可再生能源信用額度或碳抵銷所產生的費用提供稅務減免。
《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。
