Targeted measures and continued expenditures crucial to drive economic recovery; Financial services, technology and innovation sectors highlighted as key growth areas to ensure city’s long-term competitiveness
24 February 2021, Hong Kong – KPMG welcomes the Hong Kong SAR government’s budget (the “Budget”) which will provide assistance to industries and individuals affected by the ongoing COVID-19 pandemic. The Budget also contains a range of other measures designed to boost Hong Kong’s core industries and acknowledges the importance of supporting technology and innovation across multiple sectors crucial for the city’s long-term development.
John Timpany, Partner, Head of Tax, Hong Kong, KPMG China, says: “Hong Kong’s lower-than-expected budget deficit in FY2020, which resulted primarily as a result of one-off support pandemic relief measures, demonstrates the underlying strength of Hong Kong’s economy, as the city faced a deep recession due to the pandemic. Given the ongoing challenges and uncertainties in the global economy, we agree with the Financial Secretary that this is not the time to introduce new taxes.”
Alice Leung, Partner, Corporate Tax Advisory, KPMG China, says: “KPMG also welcomes the continued focus on strengthening Hong Kong’s position as an international financial centre and a wealth and asset management hub, especially measures to support green finance and the development of relevant tax arrangements to support the growth of family offices in Hong Kong, which we believe are important to maintain Hong Kong’s long-term competitiveness. On an individual level, we are pleased to see that the Government has adopted our proposed measure of issuing electronic consumption coupons to Hong Kong residents which we believe will be an effective and targeted measure to make sure the stimulus is helping business areas that have been most affected, and at the same time, promoting Hong Kong as a smart city.”
Stanley Ho, Partner, Corporate Tax Advisory, KPMG China, says: “We note that the Hong Kong SAR government’s financial position remains strong, but it is also important for the government to spend carefully in times of deficit. The government’s decision to increase stamp duty on stock transfers reflects that the city’s robust capital markets and IPO activities may offer a quick solution to increase short-term tax revenues. However, it is also important for Hong Kong’s capital markets to stay competitive with global financial markets, many of which are trending towards reducing or removing such duties. As the economy improves, tax revenues will improve. The introduction of future taxes should always be done with careful review and as much consensus as possible with the community.”
The Financial Secretary has also highlighted the importance of supporting digitalisation across multiple sectors that are adjusting to post-pandemic realities. KPMG welcomes the Financial Secretary’s plan to provide tax incentives and investments to support technology and innovation, including talent training, STEM education, tech start-ups operating in the Guangdong-Hong Kong-Macao Greater Bay Area, expansion of tech infrastructure, R&D, and additional funding for companies to adopt information technology solutions and cover the expenses for providing relevant training to their employees, which are all crucial for Hong Kong to stay competitive in the new digital future.
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