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Fiscal Policies Should Leave Wealth With People and Build a Favaourable Environment
ACCA (the Association of Chartered Certified Accountants) Hong Kong recommends the government should adopt fiscal policies in the 2008/09 budget to 'leave wealth with people' under the budget surplus, through tax measures to enhance free economy and care for the community.
Tax Advantages for Free Economy
Fergus Wong, ACCA Hong Kong Tax Sub-committee Chairman stated, "The certainty, consistency and transparency of the tax laws interpretation and execution are the crucial elements for a favourable business environment. ACCA Hong Kong recommends the government to develop transfer pricing legislation so as to avoid the scenario of investors from relocating away from Hong Kong to other preferable regions with clearer tax laws."
ACCA Hong Kong suggests a range of tax measures to benefit businesses and trade investments, which will in turn provide a more advantageous environment for business activities. Recommendations include concessionary tax rates for the regional service centre. Other tax measures include reverting deemed assessable profits on royalty payments from 30% to 10%, and to remove the disadvantageous tax treatment for plant and machinery used in mainland China but in the production of taxable profits in Hong Kong.
Tax Measures to Care for Community
Despite the recent robust economy in the past two years, the less privileged group may not benefit from the economic boom, lower employment rate and budget surplus. ACCA Hong Kong recommends leaving wealth with people by reverting the personal allowance to the 2002/03 level. To relieve the burden of the middle class, we also recommend to further reduce the progressive rates by 1% for all income brackets other than the first income bracket. ACCA Hong Kong also recommends a tax reduction for private medical insurance as a means to encourage people to acquire medical insurance to help lowering the medical expenses of the government.
ACCA Hong Kong supports the government's approach to promote social enterprises. We propose to extend the scope of the current legislation regarding charitable organisations to cover social enterprises as well as non-profit making organisations. Government can also extend the current tax legislation applicable to charitable organisations to cover heritage conservation undertakings.
At ACCA Hong Kong, we appeal to the government to adhere to the prudence principle of keeping expenditure within the limits of revenue whilst addressing different needs in the community. Exploring the most suitable approach to broadening tax base is also needed to be continued.
For further information please contact:
Carmen Lee Corporate Communications Manager (852) 2524 4988