Accounting firm urges city to cut profit tax rate to attract more investors

The city should cut its corporate tax, or at least the rate imposed on the first HK$2 million profit recorded by a business, in order to increase its competitiveness and attract more foreign investment, accounting firm Deloitte says.

Deloitte also predicted the government would post a HK$27.3 billion surplus in the financial period from April 1 this year to March 31 next year.

The firm was responding to a public consultation on the chief executive's upcoming policy address and the financial secretary's next budget, due to be delivered early next year.

Hong Kong's profit tax rate is 16.5 per cent. Lowering it by half a percentage point could send a symbolic message that the city was taking steps to attract foreign investors, Deloitte's China vice-chairwoman Yvonne Law Shing Mo-han said yesterday.

"We are keeping ourselves competitive to the extent that is affordable," Law said.

Their proposals had no direct relation to the Occupy Central civil disobedience protests, she added.

Hong Kong held on to its ranking of seventh in the World Economic Forum's September competiveness report. Singapore, the city's major competitor in Asia, was second.