Canada can learn from Hong Kong’s tax system, commerce chamber chief says
Newly appointed chairman praises city’s economic framework and calls for more trade synergy between businesses in both regions
The new chairman of the Canadian Chamber of Commerce in Hong Kong has said his country can learn from the city’s economic system and adopt it, increasing competitiveness, economic growth and tax revenue for Canada’s government.
Todd Handcock was elected the chamber’s new chairman in late October for a two-year term. The 15-year Hong Kong resident said Canada could take a page from Hong Kong’s book on tax and regulatory frameworks to fill government coffers and give companies more money to invest.
“The Hong Kong government has been very pro-business from a tax perspective,” Handcock said.
“Low taxes mean Canadian and Hong Kong companies that are operating here can further invest dollars that they don’t pay into tax, which creates employment and, overall, has created robust growth over the years.
“The Canadian companies here would love to see a simple or lower tax structure in Canada. At the end of the day, the Hong Kong government has enjoyed higher tax dollars coming in [because of the lower tax rates].”
Handcock said he believed that the same scenario would happen in Canada with tax receipts increasing as the tax rate went down.
While the federal Canadian corporate tax rate is 15 per cent, a provincial tax rate is also applied, which can reach up to 16 per cent. Hong Kong’s corporate tax rate is 16.5 per cent.
Both Canada and Hong Kong have reduced tax rates for small businesses at 10.5 and 8.25 per cent respectively.
Unlike Canada, Hong Kong does not have a goods and services tax, harmonised sales tax or value added tax. Canada’s tax system has also been accused of being complicated and cumbersome by citizens and businesses.
In 2015, two-way trade between Hong Kong and Canada totalled US$4.4 billion, with nearly 50 Canadian companies headquartered or with regional offices in the city.
There are over 300,000 Canadian passport holders living in Hong Kong – a population larger than all of the country’s offshore territories and Prince Edward Island province combined – making it the second largest Canadian expat community in the world, after the US.
Earlier this month, Canadian Prime Minister Justin Trudeau was in Beijing for what observers said were formal negotiations over a free-trade agreement between the two countries.
But both governments did not reach a consensus and a trade pact was left up in the air.
With Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor signing a free-trade agreement with Asean last month and her desire to have more of such deals, Handcock said Canada could look to Hong Kong for a trade pact.
“I think the Canadian business community will support more liberalisation of trade agreements which allows them to cooperate better, engage and have dialogues at a different level, as well as share innovation and ideas, where in nearly all cases, one plus one equals more than two,” Handcock said.
But he added that the Canadian companies’ business push was not limited to Hong Kong. He said there was also a drive into the Pearl River Delta region, as well as Southeast Asia, using the city as a launching pad.
Handcock said the focus was not only one-way as Hong Kong businesses were also interested in tapping the Canadian market, especially the hi-tech field concentrated between Canada’s most populous city, Toronto, and Waterloo. The latter is home to a top technology university and Canadian technology company BlackBerry.
“The Toronto-Waterloo Corridor is the second largest technology corridor in the world, outside Silicon Valley, so there’s a lot of investment going on ... [Hong Kong] companies are exploring it,” he said.