Hong Kong set to unveil HK$95b budget surplus on strong stamp duty takings, says accounting heavyweight

PwC also calls for tax concessions for high-tech companies and small and medium enterprises

PUBLISHED : Wednesday, 06 January, 2016, 6:39pm
UPDATED : Wednesday, 06 January, 2016, 8:31pm

A leading accounting firm has urged the government to offer tax concessions to boost the high-tech sector and help struggling small and medium firms as it forecast a surplus of HK$95.5 billion in the current fiscal year, thanks to a boost from stamp duty.

The surplus – which would be the highest since the 2007-08 fiscal year – would be more than double the HK$36.8 billion previously forecast by the government.

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The accounting firm, PwC, said the huge surplus was primarily attributable to unexpectedly high stamp duty revenue, which the firm estimates will reach HK$77.4 billion compared to a government estimate of HK$50 billion.

The firm expects profits and salaries tax to bring in HK$200.8 billion and revenue from land sales to hit HK$71.5 billion.

Financial Secretary John Tsang Chun-wah is set to unveil his latest forecasts for the current fiscal year in his budget speech to be delivered on February 24.

So Kwok-kay, a tax partner at PwC Hong Kong, said: “With buoyant trading in the equity market, coupled with the rise in property transactions, we expect total stamp duty revenue to reach HK$77.4 billion.”

The latest Land Registry figures released yesterday showed there were 76,159 property transactions worth HK$548.65 billion last year – up 0.2 per cent in value on the previous year and up 20.2 per cent on 2013.

So declined to comment on whether it would be the right time to roll out a universal retirement protection scheme in view of the huge surplus, saying: “The issue needs more consultation and should be looked at from a longer-term perspective.”

Fellow tax partner Agnes Wong Hiu-yin called on the government to introduce tax breaks to help boost competitiveness, proposing to cut profits tax from 16.5 per cent to 10 per cent for eligible high-tech companies and a similar concession for small and medium enterprises with annual turnover below HK$5 million.