All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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 from across our site

ITR is delighted to reveal all the shortlisted firms, teams and practitioners – winners will be announced on August 25
Multinational enterprises run the risk of hefty penalties if the company in question fails to register for VAT when providing electronic services in South Africa.
Tax directors have urged companies to ensure they have robust tax risk management controls when outsourcing tax functions.
Japan reports a windfall from all types of taxes after the government revised its stimulus package. This could lead to greater corporate tax incentives for businesses.
Sources at Netflix, the European Commission and elsewhere consider the impact of incoming legislation to regulate tax advice in the EU – if it ever comes to pass.
This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree