Change tax laws to help city compete: HK chamber
More needs to be done to promote to foreign businesses the advantages of Hong Kong's taxation system, says General Chamber of Commerce chief executive Alex Fong Chi-wai.
Not that the system is perfect yet, the chamber believes. It advocates more tax allowances for small businesses and has long pressed for companies under a single group to be taxed on the group's profits, not individual companies', he said.
The chamber is the biggest in the city, with 4,000 member firms.
Many countries, including the US and Singapore, already taxed a group's companies on a group basis, Mr Fong said.
'I hope the financial secretary can talk more about the tax regime as a competitiveness issue,' Mr Fong said, adding that could help position the city better in the face of growing competition from rivals such as Singapore.
Financial Secretary Henry Tang Ying-yen will deliver his budget speech on 28 February.
Jennifer Wong How-yee, a partner with accountants KPMG, said while Hong Kong's 17.5 per cent profits tax rate was lower than Singapore's 20 per cent rate, companies in the city state enjoyed tax incentives that could mean the actual rate of tax they pay is much lower.
The global trend was for profits tax rates to fall, said Ms Wong, noting that Singapore had indicated it would cut its rates if Hong Kong did.
Ms Wong believes Mr Tang is unlikely to heed calls to cut taxes in his budget speech. She expects him to limit his handouts to a three-month rates rebate, which would cost the government an estimated HK$3.4 billion, even though the budget surplus is widely expected to surpass HK$30 billion.
She also said Mr Tang's speech would be fairly low-profile so as not to overshadow next month's chief executive election.
Tim Lui Tim-leung, tax partner of accountants PricewaterhouseCoopers, said Mr Tang should not take account of the election in writing his speech.