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New tax unit studying concessions

July 05, 2017

The new tax policy unit under the Financial Services & the Treasury Bureau started operation in April and is studying the plan to provide additional tax concessions for research and development expenditure.

 

Secretary for Financial Services & the Treasury James Lau made the statement to legislators today, saying the unit is also studying the proposal to enhance the two-tiered profits tax system tabled by Chief Executive Carrie Lam in her election manifesto.

 

"Once specific proposals have been drawn up the Government will consult the stakeholders concerned," Mr Lau said, adding the first priority of the unit is to boost the development of Hong Kong’s industries and economy through good taxation policies.

 

He said when studying the taxation proposals made by the business sector, the Government must consider a series of factors, including how the proposals will affect government revenue, whether they will lead to tax avoidance loopholes, and whether they are consistent with the two fundamental principles of tax symmetry and taxing only profits sourced in Hong Kong.

 

On the proposal to relax the Inland Revenue Ordinance to give manufacturers capital expenditure allowances on leased machinery and plants, Mr Lau said the plan is not feasible as the ordinance seeks to prevent tax avoidance through various leasing arrangements for machinery and plants.

 

The proposed relaxation of the ordinance will violate the two fundamental tax principles and affect the taxing rights of Hong Kong and other tax jurisdictions, he added.



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