HONG KONG, CHINA – Media OutReach – 28 April 2020
– Given concerns over the state of the economy and job insecurity created
by COVID-19, 53 per cent of accounting professionals believe that the Hong Kong SAR
Government should not increase tax revenue at this time.
However, respondents to CPA Australia’s latest
survey favour the SAR Government – at an appropriate time in the future – introducing
further measures to support the economy and society, including tax measures
aimed at improving public health and supporting medical services, to improve
the environment, and to encourage innovation. This should include preferential
tax treatment for innovation and technology and greater digital delivery of
services by the Inland Revenue Department.
The survey was conducted from 3 to 17 April, with
151 responses from Hong Kong-based accounting and finance professionals working
in a variety of different industries and with 67 per cent working in senior
leadership positions.
Tax revenue and the proposed imposition of a global minimum tax rate
Mr.
Anthony Lau, CPA Australia’s Divisional President of Greater China 2020 said, “The
COVID-19 pandemic has dealt an unprecedented and severe blow to the global and
Hong Kong’s economy. The government has introduced appropriate relief measures amounting to some $310 billion, equivalent to over 10 per
cent of gross domestic product. Faced with challenges such as fiscal deficits
in the coming few years, as well as an ageing population, a wide income and wealth gap, and challenges from
fast changing international tax rules, it is essential to consider how to stabilise
Hong Kong’s revenue in the long run.”
When asked whether Hong Kong SAR Government needs to increase tax revenues, 53 per cent of
respondents chose no while 44 per cent said yes.
Lau explained, “With the economy in need of support and stimulus at
this time, it is not surprising that most do not favour raising tax revenue.
“However, the 44 per cent of respondents who believe
that the Government should increase revenue are probably concerned with the
sustainability of Hong Kong’s finances in the longer term, given the
Government’s reliance on a narrow and volatile revenue base. In 2018/19,
non-tax revenues, including from land sales, accounted for 34.9 per cent of
total government revenue, which is well in excess of other jurisdictions like
Singapore and the United Kingdom.
“When the economy recovers, the Government should begin considering
options to reform the tax system to support the sustainable development of the
city. The best way to do this is
through a public and comprehensive ‘root-and-branch’ review of the tax system.
“One of the more immediate tax concerns for Hong Kong is the impact of the fast – changing
international tax environment such as Base Erosion and Profit Shifting (BEPS) from the OECD and the review
of our foreign source income exemption regime by the European Union this year. A
quarter of respondents believe the proposed global minimum tax rate will weaken
the competitiveness of Hong Kong’s tax system due to factors such as
additional operating costs for multi-national corporations in Hong Kong and the
possibility of impacting Hong Kong’s simple tax system, which is one of the city’s
core competitive advantages.”
Measures to build a healthier and forward-looking society
In the past few months, the pandemic has changed the way we live, work
and conduct business. This may have shifted public sentiment, with the survey
results indicating that there is strong support to use the tax system to help
build a healthier and forward-looking society. Many respondents (48 per cent) believe
that the Government should consider increasing duty on tobacco, alcohol and
hydrocarbon oil if it is to broaden the tax base within the next three years,
while 37 per cent selected the introduction of an environmental protection tax
as the second highest option.
Respondents also supported using the tax system to provide incentives to
companies to take environmental action. When asked what profits tax measures
the Government should introduce, respondents were most likely to choose
incentives for environmental action (33 per cent).
Lau explained, “Having learned the lessons from
the enormous impacts the pandemic has on society and the economy, accounting
and finance professionals have the foresight to build a better and more sustainable
environment for current and future generations. A healthier city may also help
to reduce the growth in public and private health costs and improve our
competitiveness.”
Another significant change brought about by the pandemic is the growing adoption
of technology and digital services since daily physical contact has been
disrupted. Accountants expect that Hong Kong’s tax administration can be improved,
with 43 per cent of respondents wanting to see more services by the Inland
Revenue Department digitalised and made more mobile-friendly. Further, the top
industry that respondents believe is most in need of preferential tax policies is
innovation and technology with 38 per cent of respondents selecting this
industry.
“Viewed through the lens of history, epidemics and pandemics are key factors
in transforming societies. I believe that the current health crisis is similar
to the ones in the past and as a result, an increase in the awareness of societal
health and wellbeing, utilisation of technologies and innovation solutions to
adapt to changing living conditions, will push our society forward,” Lau said.
CPA Australia is one of the world’s largest
accounting bodies with more than 166,000 members working in 100 countries and
regions around the world, with more than 25,000 members working in senior
leadership positions. It has established a strong membership base of more than
19,000
in the Greater China region.
HO CHI MINH CITY, VIETNAM - Media OutReach Newswire - 24 December 2024 - JustMarkets…
BANGKOK, THAILAND - Media OutReach Newswire - 24 December 2024 - The Asia Corporate Excellence…
HOHHOT, CHINA - Media OutReach Newswire - 23 December 2024 - China's National Forestry and…
HONG KONG SAR - EQS Newswire - 23 December 2024 - Novautek Autonomous Driving Limited…
JAKARTA, INDONESIA - Media OutReach Newswire - 23 December 2024 - V-GREEN and PT Xanh…
Increase in opportunities predicted for high-speed optical transceivers and miniaturized connectivity solutions to address data-intensive…