[Hong Kong, 5 February 2018] The Hong Kong Institute of Certified Public Accountants (HKICPA) today shared its tax-related recommendations for the 2018-19 Budget, which will be announced on 28 February 2018. Under the heading "Being Smart, Staying Ahead and Staying Healthy", the Institute’s budget proposal focuses on tax policies and measures on the revenue side of the budget.

Hong Kong’s fiscal reserves stood at HK$954 billion at the end of March 2017. HKICPA estimates that the fiscal surplus for 2017/18 will reach HK$176 billion at the end of March, and fiscal reserves will increase to over HK$1.1 trillion. This is being driven by the higher than expected revenue from land sales, which the Government estimates at HK$101 billion, but which HKICPA believes will be HK$185 billion; as well as an increase in stamp duty, which is expected to be over HK$30 billion more than the Government estimates.

Investing in the tax regime development

In its budget submission, HKICPA expressed concern that key elements of the tax regime have become less predictable, especially around offshore claims and the source of profits, which may negatively affect investment.

“Uncertainties caused by unclear interpretation of court judgments and tax rules can act as a brake on investment, as businesses would prefer to invest where they can gauge their tax liabilities,” said Mr. So Kwok Kay, Chairman of the Institute's Taxation Faculty Executive Committee.

“To help businesses, there should be more codification of tax treatments in the rules, and the Inland Revenue Department (IRD) should introduce a clearer process for consulting on Departmental Interpretation and Practice Notes,” he explained.

HKICPA welcomes the establishment of the Tax Policy Unit (TPU) last year, but believes the TPU should broaden its scope beyond its initial focus on R&D and the two-tier profits tax arrangements.

“A number of major developments in international tax are forcing changes on Hong Kong’s system,” said Mr. So, “These include new standards on transfer pricing and exchange of taxpayers' financial account information between revenue authorities. Increasing competition for investment is also leading many countries to reduce tax rates. The US for example, is slashing its corporate tax rate from 35% to 21%.”

The Government should provide more resources for the IRD, and also to the TPU, which should make greater use of external experts in the tax and commercial fields to help with researching into key issues, such as the long-term sustainability of the source principle; broadening the tax base; reviewing the effectiveness of existing incentives and modernising the legislation.

Promoting start-ups, innovation and R&D

“In a fast-changing world, the Government needs to regularly evaluate Hong Kong's tax policies and measures. The time is right for Hong Kong to do more to nurture innovation, review the tax regime and invest in the community's well-being.” said Mr. Curtis Ng, Convenor of Budget Proposals Sub-committee of HKICPA.

“Expanding the scope of eligible research and development (R&D) deductions would be very helpful. The 2017-18 Policy Address announced super deductions of up to 300% on qualifying R&D expenditure, which we generally welcome. However, start-up companies may not be generating profits in their early years, so granting tax credits to start-ups would be a better way of incentivising investment in R&D by such companies," Mr. Ng said.

"More flexibility is required in how the deductions for R&D are applied. Deductions should be allowed for R&D activities controlled from Hong Kong but which may be subcontracted wholly or partly to parties overseas," added Mr. Ng.

In addition, the Government should consider tax incentives to encourage venture funds and angel investors to invest in start-up companies, to supplement the efforts of the new Innovation and Technology Venture Fund Scheme, which is a time-limited initiative.

HKICPA is proposing several measures to promote Hong Kong as an intellectual property (IP) hub, including expanding the range of IP rights eligible for capital expenditure deductions, to encourage the creation and commercialisation of IP in Hong Kong. The Government should also give tax credits for foreign withholding taxes paid on royalties. This is particularly important in relation to countries where Hong Kong does not have a double tax agreement in place- that deals with the taxation of royalties.

Hong Kong’s Smart City Blueprint highlights the need for long-term sustainable development. New tax incentives could support the Blueprint by promoting retro-commissioning and building-based smart technologies. Additional deductions should also be considered for businesses to undertake cybersecurity audits. Cybersecurity is particularly important in industries which store and make use of large quantities of sensitive personal data.

The volatility of bitcoin and other cryptocurrencies underscores the potential risks of the digital economy. Hong Kong should take action to determine whether more regulation and investor protection are needed and what tax treatment should apply to digital currencies. Investors and taxpayers also need guidance on tax repercussions of digital currency transactions.

To help promote better air quality and more sustainable living, the Government should further encourage the adoption of electric private cars by exploring incentives for commercial car parks to install charging stations. The Government should consider raising the cap on the waiver of first registration tax on electric private vehicles, at least for those who replace a petrol or diesel engine car with an electric car, or those buying a car for the first time. In addition Hong Kong should revisit the idea of electronic road pricing to reduce traffic congestion at peak times.

Improving community well-being

 

Despite the expectations of another very large fiscal surplus and massive fiscal reserves, HKICPA does not believe that the Government should give across-the-board cash handouts in the Budget. Rather, financial assistance should be targeted towards helping the most needy.

In promoting community well-being, HKICPA recommends an annual tax deduction of up to HK$100,000, equivalent to the home loan interest deduction, for rental payments to benefit taxpayers who cannot afford to buy their own homes and rent accommodation from the private market. An additional deduction of up to HK$60,000 for voluntary contributions to Mandatory Provident Fund accounts should encourage employees to save early for retirement.

The cost of public healthcare is escalating in Hong Kong, in part due to an aging population. HKICPA recommends a deduction of up to HK$12,000 per taxpayer and dependants for private health insurance, to encourage better usage of healthcare resources. Meanwhile, to support the aim of life-long good health and reduce the long-term burden on the healthcare system, parents should be able to claim a deduction of HK$12,000 for enrolling their children on approved sports training courses.

The HKICPA Hong Kong Tax Policy and Budget Proposals 2018-19 are available online at: http://www.hkicpa.org.hk/file/media/section5_membership/Professional%20Representation/ gov-budget/Budget_Proposals_2018-19_(submission)_180205.pdf 

 

香港會計師公會促請政府善用充裕財政盈餘
鼓勵研發及改善民生

（香港，二零一八年二月五日）政府將於二零一八年二月二十八日宣佈二零一八至一九年度財政預算案，香港會計師公會今天就財政預算案發表稅務建議。公會的建議題為《促創新 惠民生》，集中討論稅務政策及預算案收入方面的措施。

截至二零一七年三月底，香港的財政儲備為 9,540 億港元。公會估計，二零一七至一八年度財政盈餘於二零一八年三月底達 1,760 億港元，而財政儲備將增至超過 11,000 億港元，增幅是由於政府的賣地收入高於預期及印花稅收入增加所致。政府估計賣地收入為 1,010 億港元，公會則估計達 1,850 億港元，而公會印花稅收入預期較政府的估計高出超過 300 億港元。

投資於稅制發展

在財政預算案建議中，公會關注到稅制的主要部份增加了不確定因素，尤其離岸稅項豁免及利潤來源地等方面，會對投資構成不利影響。

香港會計師公會稅務師會執行委員會主席蘇國基先生表示：「法庭判決及稅務規則的不清晰詮釋帶來不確定因素，並會窒礙投資，因為企業傾向選擇他們可充份判斷稅務責任的地方投資。」

蘇先生解釋說：「公會認為一些稅務規則的處理有進行立法的需要，而稅務局應在發出新《釋義及執行指引》前進行系統性諮詢，以利營商環境。」

公會歡迎政府去年公佈成立稅務政策組。稅務政策組初步專注處理研發稅務及兩級制利得稅安排，公會認為應擴大小組的負責範疇。

蘇先生續稱：「國際稅務的多項重大發展將迫使本港稅制作出改變，當中包括有關轉讓定價及稅務機關交換納稅人財務賬戶資料的新準則。同時，國際投資市場的競爭加劇，導致不少國家降低其主要所得稅稅率，舉例說，美國正將其企業所得稅率由 35%大幅下調至 21%。」

公會認為政府應為稅務局及稅務政策組投放更多資源，讓稅務政策組可借助外界的稅務及商界專家的協助，研究來源徵稅原則的長遠可持續性、拓闊稅基、檢討現有稅務優惠成效及法例現代化等稅務事宜。

扶助初創、推動創新及研發

公會財政預算案建議委員會召集人伍耀輝先生表示：「隨着社會不斷進步，政府要定期檢討本港的稅務政策及措施。現時是香港投放資源推動創新、檢討稅制及改善民生的好時機。」

「擴大研究及發展的稅務可扣減費用範圍將可發揮作用。公會大致歡迎於二零一七至一八年施政報告內所公佈，為合資格研發開支提供 300%的超額稅務扣減。然而，初創公司可能在成立初年未有利潤，所以向初創公司提供補貼是激勵投資研發的更有效方法。」伍先生說。

「研發開支的稅務扣減安排要更具靈活性。政府亦應為外判或部份外判予海外進行、但控制權在香港的研發活動提供稅務扣減。」伍先生補充說。

此外，公會建議政府考慮提供稅務優惠，鼓勵創投基金和天使投資者投資於初創公司，此舉能補足新推行並有時限性的「創科創投基金」。

為推廣香港作為知識產權中心，公會建議了多項措施，包括擴大知識產權的資本開支可扣減範圍，以鼓勵於本港創造知識產權及進行商業化。政府亦應為特許權使用費的預提所得稅提供稅收抵免，這安排對納稅人於非香港稅收協議締約國，就特許權使用費被徵收預提所得稅能否在港獲得稅收抵免，至為重要。

政府的《香港智慧城市藍圖》提出香港需要作長遠可持續發展。為推動發展成智慧城市，政府可推行新稅務優惠，鼓勵重新校驗及樓宇為本的智能科技。政府應考慮對進行網絡安全審核的公司給予額外稅務扣減。網絡安全審核對需要儲存及處理大量個人敏感資料的行業特別重要。

比特幣及其他加密貨幣的波動性反映數碼經濟的潛在風險。香港現應考慮是否需要作出更多規管及保障投資者的措施，以及數碼貨幣所適用的稅務處理。投資者及納稅人亦需要有關數碼貨幣交易如何影響稅務安排的指引。

為改善空氣質素及促進可持續的居住環境，政府應加強鼓勵市民採用電動車，研究就商用停車場增設充電站給予稅務優惠。政府應考慮至少為以電動車更換汽油或柴油引擎車或首次購買電動車人士，提供較高的電動私家車首次登記稅寬免額。此外，香港應重新探討電子道路收費，藉以緩和繁忙時段交通擠塞的情況。

改善民生

儘管預期今年政府再度錄得龐大的財政盈餘且財政儲蓄充裕，公會認為政府預算案不應作全民現金分派。任何財政援助應針對給予最有需要的人士。

為改善民生，公會建議為未有能力置業而在私人市場租屋的納稅人，提供每年最高 10 萬港元的租金支出稅務扣減，建議的可扣減金額相當於居所貸款利息可扣減金額。政府亦可鼓勵更多市民及早為退休儲蓄，向為強制性公積金戶口作自願性供款的人士提供額外可扣減金額，每年最多 6 萬港元。

香港公共醫療開支日益上升，部份原因是人口老化。公會建議提供私人醫療保險支出的稅務扣減，每名納稅人及其每名受養人每年最多 12,000 港元，鼓勵更有效使用醫療系統資源。此外，為保持市民長遠健康及減輕醫療系統的負擔，公會建議就子女參與核准體育訓練課程的支出為父母提供稅務扣減，每年最多 12,000 港元。

公會的二零一八至一九年度稅務政策及財政預算案建議全文已上載http://www.hkicpa.org.hk/file/media/section5_membership/Professional%20Representation/ gov-budget/Budget_Proposals_2018-19_(submission)_180205.pdf，以供參閱。