Hong Kong: Chief executive’s 2018 policy address sets out tax plan
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Hong Kong: Chief executive’s 2018 policy address sets out tax plan

Sponsored by

sponsored-firms-kpmg.png
Hong Kong 320 x 215

Chief Executive Carrie Lam Cheng Yuet-ngor delivered her second policy address on October 10 2018, which sets out the Hong Kong government’s policies over the coming years.



The chief executive unveiled at least 250 initiatives on pressing issues such as land supply, healthcare, elderly care and welfare.

Of interest from a tax perspective is the shift over the past few years towards a more proactive view on tax and the use of tax incentives to enhance Hong Kong’s position as an international finance centre and as a major platform for capital raising and financing.

This year, the maritime industry was identified as a major pillar in supporting the development of Hong Kong’s trade and logistics industries. Given mainland China’s belt and road initiative and the greater bay area development plan, it will be important to enhance Hong Kong as a high value-added maritime services centre and an important trans-shipment hub in the Asia-Pacific region. The key tax measures include:

  • Introducing tax concession measures to attract more ship leasing companies to set up operations and expand their businesses in Hong Kong; and

  • Providing tax reliefs to promote the development of marine insurance and the underwriting of specialty risks in Hong Kong.

Other tax measures that were proposed to diversify Hong Kong’s economy include:

  • A new limited partnership regime that will be introduced in Hong Kong following the recent commencement of the open-ended fund company regime and related profits tax exemption for such companies; and

  • Exploring jointly with the relevant mainland China authorities appropriate measures to reduce the tax burden of teachers and researchers who cross the border for work. This is to promote the flow of scientific research talent between mainland China and Hong Kong, thereby fostering the development of the greater bay area as a global technology and innovation hub.

In the coming years, the Hong Kong government is also aiming to increase its double tax treaty network to more than 50 treaties.

The government’s initiatives are welcome as they offer various tax incentives to diversify Hong Kong’s economy and remove some of the competitive disadvantages Hong Kong faces in attracting and retaining businesses. 

In the context of the ship leasing incentive, most of the shipping income derived from lease rentals is currently exempt from tax in Hong Kong. As such, we hope that any new tax incentives do not actually go backwards and impose tax on such operations, but rather will complement and expand the current exemption to cover a range of shipping related support services conducted in Hong Kong.

We also hope that the new limited partnership regime will address the shortcomings of the open-ended fund company regime that has made it practically difficult for funds based in Hong Kong to use.



lu-lewis.jpg
ng

Lewis Lu (lewis.lu@kpmg.com) and Curtis Ng (curtis.ng@kpmg.com)

KPMG China

Tel: +86 (21) 2212 3421

Website: www.kpmg.com/cn

more across site & bottom lb ros

More from across our site

Despite the relief, Brazil’s government has also presented a bill which seeks to re-impose a tax burden on companies’ payroll, one local tax specialist told ITR
Jeremy Brown arrives at the firm after a near 16-year career with Deloitte
PwC could elect a woman into the senior leadership position for the first time; in other news, KPMG Australia has extended its CEO’s term
The Senate report into PwC’s scandal is titled ‘The cover up worsens the crime’
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
The firm’s tax business generated a quarter of HLB’s overall revenues in 2023
While successful pillar two implementation will require collaboration across all units, a combination of internal and external tax advice is at the centre of the effort
Binance has also been accused of manipulating foreign exchange rates via currency speculation and rate-fixing
Six individuals should have raised questions over information they received but did not breach professional standards, according to the firm
The partnership of KPMG UK has installed Holt for a second term as CEO and senior partner; in other news, a Baker McKenzie partner has sued the IRS
Gift this article