Financial Secretary Paul Chan Mo-po today unveiled the 2021/22 Budget. The Government has forecast a fiscal deficit of HK$257.6 billion for 2020/21, first time ever for Hong Kong to have recorded an economic contraction in two consecutive years. Hong Kong’s fiscal reserves are expected to be HK$902.7 billion by 31 March 2021.
Facing an unprecedented downward trend in economy, ACCA (the Association of Chartered Certified Accountants) Hong Kong endorses the Government’s principle in stabilising the economy and relieving people’s burden. While weighing up public spending based on our revenue, the public expenditure in areas related to people’s livelihood is not reduced. It is important to infuse energy in sustainable economic development and maintain confidence in the market to enable businesses to rebound and ensure stable employment when economy recovers.
ACCA welcomes the Government’s series of tax relief measures, such as the issuance of electronic consumption coupons (valued at HK$5,000) which will not only help lessen the economic burdens on the general public but also stimulate consumptions and help local businesses to recover.
ACCA also welcomes the Government’s initiatives to attract international investors, such as the launch of the Insurance-linked Securities Grant Scheme and the subsidies for qualifying REITs. This will help safeguard Hong Kong as an international financial centre. With the rising unemployment rate and business closures, ACCA urges the Government to take an active role as a catalyst and enabler in driving economic development, introducing more tax measures to help businesses and citizens in navigating through the unstable environment.
Wilson Cheng, Co-chairman, Tax Sub-committee of ACCA Hong Kong said, ‘ACCA believes the series of measures enhancing livelihoods mentioned in the Budget, such as salaries / profits tax refund and the issuance of consumption coupons, which will help ease the financial burden of the public, including non-taxpayers. We also acknowledge the creation of the HK$15 billion Unemployment Support Fund which could offer targeted help to ease the financial burden of the unemployed. We shall continue to monitor if more funding is needed, and we urge the Government to invest more in job creation and upskilling the workforce in order to tackle unemployment more effectively.’
Wilson continued, ‘We wish to reiterate our earlier recommendation that the Government can consider granting a special one-off Covid-19 allowance of HK$10,000 per taxpayer and HK$10,000 per dependent of the taxpayer. This can reduce citizen’s tax burden, but also improves household cashflow and stimulates the economy. We also suggest introducing further tax relief measures to support Hong Kong citizens in facing anticipated economic difficulties, such as tax reduction for rental expenses. We suggest rental payment for taxpayers’ dwellings should enjoy the same tax deduction as home loan interest, which can be capped at HK$100,000 per annum.’
ACCA Hong Kong endorses the Government’s plan for introducing concrete relief measures for the business sector, to help them face challenges such as increasing operating costs and shrinking profit margin. We are pleased to see the Government putting resources to drive sustainable and diversified economic development of Hong Kong.
Charles Chan, Co-chairman, Tax Sub-committee of ACCA Hong Kong said, ‘ACCA welcomes the Government’s commitment to developing the real estate investment trust (REIT) market by introduction of subsidies for qualifying REITs and Open-ended Fund Company covering 70% of the expenses paid to local professional service providers for the listing of REITs and Open-ended Fund Company in the coming three years (capped at HK$8 million per REIT and HK$1 million per Open-ended Fund Company). This will help reinforce Hong Kong’s role as a premier capital raising centre. Also, the launch of the Insurance-linked Securities Grant Scheme (capped at HK$12 million per issuance) will help attract insurance enterprises to Hong Kong.’
Charles continued, ‘We would like to reiterate our earlier recommendation on the introduction of a cash refund by the Government of the tax amount in respect of the current year tax loss, calculated by applying the current profits tax rate of 8.25% or 16.5% on the tax loss, but capped at the amount of profits tax paid by the same entity in the last one or two years of assessment or HK$165,000 whichever is lower. This tax refund can significantly improve companies’ cashflow and help keep them afloat in difficult times. To help establish Hong Kong as the intellectual properties (IPs) hub of the Asian region, we recommend that apart from allowing the super tax deduction of the designated expenditures incurred by companies for the production, creation, registration and acquisition of intellectual properties, income generated from the subsequent exploitation of these intellectual properties should also be subject to a reduced tax rate, i.e. 8.25%.’
Overall, ACCA Hong Kong supports the Budget’s measures, which are conducive to the fostering of economic growth as well as the betterment of livelihoods. We suggest the Government to adopt more long-term measures in a proactive manner, so as to help the sustainable development of Hong Kong.
Stanley Ho, Co-chairman, Tax Sub-committee, ACCA Hong Kong concludes, ‘In principle, we agree with the measures introduced in the Budget. We can see that the Government has put the society’s needs as well as the impact of pandemic in consideration in introducing relevant measures and supporting the unemployed as well as underemployed. We welcome the introduction of bill to raise the rate of Stamp Duty on Stock Transfers to 0.13% – a moderate increase to maintain stock market attractiveness while help increase government revenue in the long run. The Budget also covers future growing areas such as the Green Bond Programme and Family Office Business to ensure the city’s sustainable development. As we look forward to an extensive rollout of Covid-19 vaccination, the global economy will be boosted. ACCA urges the Government to take an active role in stimulating economy and relieving financial burden of citizens. We also hope that the Government can start the discussion and consultation of tax reform, so as to establish more sustainable and effective measures on improving the competitiveness of the local business environment, ensuring bright economic prospects in the long run.’
Media Enquiries: If you wish to discuss the 2021/22 Budget with an ACCA spokesperson, please call (+852) 2973 1112.
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