CPA Australia has released its recommendations for Budget 2023-24 to revitalise the economy and create a better future. With an estimated HK$126bn (£13bn) fiscal deficit for the financial year 2022-23 and HK$820bn of remaining fiscal reserves, CPA Australia believes Hong Kong needs bold action to attract talent, improve the environment and boost the economy.
CPA Australia’s taxation committee co-chairperson, Anthony Lau, said: “Hong Kong’s economy is expected to rebound this year along with the resumption of cross-border travel and easing of Covid-19 restrictions.”
“However, volatility, uncertainty and inflation pressures weigh on the recovery. We want the government to re-establish Hong Kong on the world stage, while improving public finances.”
Encouraging SME transformation
CPA Australia’s taxation committee co-chairperson, Janssen Chan, said e-consumption vouchers have helped many SMEs digitally transform in the past two years.
Chan said: “To build on that momentum, we suggest the government relaunch and increase funding to the Distance Business Program to help more businesses digitalise and expand their online presence.
“Though we need to start moving away from an expansionary approach in the budget, a modified version of the e-consumption voucher scheme could be considered for Hong Kong residents, with a focus on supporting lower-income earners, if the government considers the economic conditions require it.
“Government measures over the past two years have helped many SMEs stay afloat but uncertainty continues. We want measures like the Special 100 per cent SME Financing Guarantee Loan Scheme and the Pre-approved Principal Payment Holiday Scheme extended by one year.”
“To address the manpower shortage issue, the government can assist is to improve the chances of younger generations being able to buy a home in Hong Kong by helping with a down payment.
“Given SMEs are particularly struggling to attract and retain talent, the government may consider offering an additional tax deduction on salaries expenditure for companies hiring employees aged 60 or over, which is another pool of top talent.”
Building sustainable public finances, promoting a green society
Lau added: “Following three years of the pandemic, building a healthy and liveable society for Hong Kong residents is a priority. We want measures that create a better living environment.”
CPA Australia wants the tobacco duty increased to reduce smoking rates and alleviate the burden on public healthcare system. A 100% increase in tobacco duty will generate around HK$8bn (£843m) in additional revenue in 2023-24. Further, the government should consider a tax on non-recyclable plastic products to reduce plastic consumption and waste.
Lau further commented: “Hong Kong’s simple and low tax system is important to attracting companies and investment. We want the government to work with Mainland authorities to enhance the Hong Kong-Mainland of China Double Tax Arrangement (DTA) and help distinguish Hong Kong from regional competitors. This could include reducing the dividend withholding tax rate.”
“We want the capital investment entrant scheme reintroduced and eligibility expanded to Chinese nationals. Alternatively, the government could introduce an immigration program that provides residency status to investors making investment in strategic industries.”
Reducing cost of living pressures, improving living standards, attracting talent
CPA Australia’s taxation committee deputy chairperson, Theresa Chan, said Hong Kong residents were facing higher costs, particularly hurting low-income earners.
She said: “To help ease cost pressures we want the HK$10,000 tax rebate on salaries tax maintained. Personal allowance, child allowance and married person’s allowances should be increased. The government should also consider increasing the salaries tax allowances at least in line with inflation. We also recommend an energy bills subsidy to assist with rising prices.”
“To prepare for an ageing tsunami and to alleviate the burden on the public health system, we suggest increasing the cap on tax deductions for voluntary contributions to the MPF scheme to HK$100,000 and the Voluntary Health Insurance Scheme (VHIS) to HK$12,000 respectively. For taxpayers who are not policyholders of the VHIS, we suggest introducing a tax deduction on unreimbursed medical and health check expenses from private healthcare providers up to HK$12,000.”
“To attract talent to work and stay in Hong Kong, we suggest enhancing the Top Talent Pass Scheme by reducing the salaries tax rate for successful applicants by 50 per cent for the first two tax years, subject to a cap of HK$1.2 million of income.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
