HONG KONG SAR - Media OutReach Newswire - 6 February 2024 - Today, CPA Australia submitted a series of recommendations for possible inclusion into Budget 2024-25 to the Hong Kong SAR Government. With an estimated HK$127 billion fiscal deficit for the financial year 2023-24 and HK$708 billion of fiscal reserves, CPA Australia urges the Government to make announcements in the upcoming budget that balance the need to address the deficit with supporting the city's economic rejuvenation and sustainable development. Attracting regional headquarters and investments To improve Hong Kong's public finances, Mr Anthony Lau, co-chairperson of CPA Australia's Taxation Committee for Greater China, believes it's crucial for the government to increase its revenue by enhancing the city's overall attractiveness to companies, investment and talent, "Facing global uncertainties and volatility, many companies are seeking growth opportunities in Asia. To take advantage of this, Hong Kong should take steps to attract these companies to establish their regional headquarters (RHQ) in the city, by offering a concessional tax rate, for example 8.25 per cent." "Gulf Cooperation Council (GCC) countries present another opportunity for Hong Kong. Through more government-to-government dialogue and closer bilateral cooperation, the Government can do much to attract more enterprises and investment from the GCC. "We suggest the government develop a bundle of preferential tax incentives to encourage more GCC enterprises to set up in Hong Kong. This can include a two-year exemption on profits tax for GCC companies that establish their RHQs in the city. To stimulate the capital market, we suggest offering a three-year exemption on stamp duty on the shares of GCC companies traded on the Hong Kong Stock Exchange. A similar stamp duty extension could also be given to the shares of Hong Kong private and listed companies GCC's single-family offices holding investment vehicles (FIHV) invest in. "To strengthen the role of Hong Kong as a super connector between GCC and Mainland, the government can discuss with mainland authorities the possibility of exempting Mainland withholding tax on interest and dividends that GCC sovereign wealth funds receive from investments in strategic industries through Hong Kong such as sustainable development and emerging technologies." Building a green and vibrant city Lau also emphasises on the importance of enhancing Hong Kong's appeal as a green and vibrant city for business and tourists alike, "The government should continue to boost the green economy as sustainability has become a crucial factor for investment decisions. For example, the government should extend the Green and Sustainable Finance Grant Scheme to subsidise eligible bond issuers and loan borrowers, which is due to expire this year. The Government may also consider offering a 150 per cent super deduction for the cost of acquiring energy-saving machinery and equipment. A super deduction could also apply to the interest expenses incurred on green bonds issued by Hong Kong corporations. "To achieve carbon neutrality, the Government should study the possibility of introducing a carbon tax on corporations emitting significant greenhouse gases in Hong Kong starting from 2026 at the earliest. We also suggest increasing fines and penalties for environmental damage." To promote the mega event economy in Hong Kong, Lau suggests the Government offer a 150 per cent super deduction for event sponsorship expenses. Stimulating financial services and reviewing tax system Ms Karina Wong, Deputy Chairperson of CPA Australia's Taxation Committee for Greater China suggests the Government implement additional measures to attract family offices and stimulate growth in the financial sectors, "When determining if the eligible FIHV meet the minimum asset under management requirement of HK$240 million, the government should consider allowing a multiplier of 1.5 be applied to investments in Hong Kong listed shares, subject to a cap." "Further, we suggest broadening the concessionary tax regime for family offices by including fixed-income products, antiques, artwork, and virtual assets in tax-exempt investments. We also suggest offering a 8.25 per cent concessionary tax rate for fee income derived by fund and family office managers." Wong also highlights the urgency of Hong Kong signing more Comprehensive Avoidance of Double Taxation Agreement (CDTA) with jurisdictions to minimise...