2017/18 Hong Kong Budget
The Financial Secretary for the Hong Kong Special Administrative Region (HKSAR), Mr. Paul Chan, has delivered his first budget on Wednesday, 22 February 2017.
Our coverage includes a commentary and analysis in response to the Budget prepared by the Deloitte Hong Kong Budget Team, led by Tax Partners Mr. Davy Yun and Ms. Sarah Chan and Tax Director Mr. Alfred Chan of Deloitte China, and a summary highlighting the key proposals.
The Financial Secretary delivered a forward looking budget on 22 Febauray 2017, which seeks to boost local competitiveness and enhance the traditional role of Hong Kong in providing strategic connectivity to global markets. However, the Financial Secretary seems cautious in this last budget under the government led by Chief Executive Leung Chun-ying, which lacks new and inspiring tax measures to address the pressing needs of the community.
"There are also measures to develop high value-added logistics services, including transshipment and cross-border e-commerce, along with emphasis to support Hong Kong in its participation in Asian Infrastructure Investment Bank and leverage opportunities from the Belt and Road Initiative. This Budget has the mission to continue developing Hong Kong as an infrastructure investment and financing centre, and as the channel to connect China with the global markets," said Davy Yun, Tax Partner, Deloitte China.
"The government should be commended for introducing a tax review after years of demand from the profession. This is also something we have advocated in our recommendations to the government. The Financial Secretary has also taken on board our proposal to widen the marginal bands of salaries tax, but the level of increments could have been higher in order to alleviate the burden of the middle class," said Sarah Chan, Tax Partner, Deloitte China.
Summary of Tax Measures
Hong Kong Tax News
Issue 54 - 22 February 2017
This Tax Newsflash summarized the major proposals with respect to tax and business:
- Major Proposals
- Salaries Tax
- Profits Tax
- Property Tax
The 2017/18 Budget was prepared against a backdrop of local political uncertainty and increasing threats of a volatile global macro-economy surrounded by Brexit, the changing political landscape in Europe and a potential global trend towards trade protection measures. The 2017/18 Budget is designed to reinforce the competitiveness of Hong Kong's traditional pillar industries, and at the same time, introduce measures to promote the re-industrialization and diversification of industries, and nurture development in the financial services and asset/wealth management industry, the aircraft leasing business, the innovation and technology sector, etc., with a view to enhancing the competitiveness of Hong Kong and achieving sustainable long-term economic growth.
The better-than-expected surplus of HKD 92.8 billion for FY2016/17, which is relatively close to Deloitte's estimate before the announcement of the Budget, mainly results from the higher-than-budgeted revenues from land sales and stamp duty. In view of this surplus, it is not surprising that the general public was anticipating the announcement of "sweeteners" and short-term stimulus measures. However, the Budget is considered relatively prudent and cautious, although the government's forward-looking vision as demonstrated in various proposed initiatives is welcomed.