A two-tier profits tax system has been proposed to alleviate the financial burden of Hong Kong SMEs and startups, according to Financial Secretary Paul Chan Mo-po.
If approved, the proposal would be the Special Administrative Regions’s first major profits tax reform in decades that will cost the government about HK$5 billion in annual revenue. The new tax system would entail lowering the tax rate for the first HK$2 million of profits to 10 per cent, from the current 16.5 per cent.
“The proposal is definitely helpful for alleviating the financial burden of SMEs and start-ups,” says Federation of Hong Kong Industries chairman Jimmy Kwok Chun-wah. “This will also strengthen the overall competitiveness of Hong Kong’s business environment and may attract more local or overseas entities to start their businesses in Hong Kong.”
Subject to approval by Chief Executive Carrie Lam Cheng Yuet-ngor, the new regime could be implemented before October, when she is due to deliver her maiden policy address.