Hong Kong researchers working in mainland China should get tax breaks there, Paul Chan says
Plan is part of innovation push but city’s finance chief says reaction to his suggestion in Beijing ‘has not been very enthusiastic’
Hong Kong’s financial secretary said on Tuesday that he wanted researchers from the city who go to the mainland to develop new technology to be exempted from paying tax there.
Chan said during a trip to Beijing to meet mainland financial officials that he had floated the suggestion before, and would raise it again during his stay.
“Quite a number of people, including university professors, have told me that people in this field always have to spend some time on the mainland. In such cases, they would have to pay mainland taxes,” he said.
Chan noted that tax on the mainland is “much heavier than that in Hong Kong”.
“So we have earlier asked that, in such situations, can they pay Hong Kong tax only and not mainland tax?” he said.
Under mainland rules, Hongkongers who spend more than 183 days north of the border within a year have to pay mainland tax.
The rate varies, but can get up to 45 per cent if the person’s net taxable monthly income is more than 80,000 yuan (HK$94,240).
“We have raised this suggestion before, but the response has not been very enthusiastic. But that doesn’t matter. In many cases, it’s a matter of talking it through, and letting them know our views. [The suggestion] is beneficial for both sides,” Chan said.
Lam says Beijing committed to Hong Kong’s semi-autonomy
The 0.73 per cent spend works out at HK$18.18 billion based on last year’s GDP.
The profits tax rate would also be halved to 8.25 per cent for the first HK$2 million of net gains – the much-anticipated tax break that Lam promised on the campaign trail and that would cost the government HK$5.8 billion in forfeited revenue per year.
Chan arrived in the Chinese capital on Sunday to meet mainland officials in charge of financial and monetary policies. He was scheduled to return to Hong Kong on Wednesday.
