The government's budget for 2011-12 is solid in tax measures for helping out families but weak in strengthening the city's business competitiveness, says the Hong Kong Institute of Certified Public Accountants.
"The only business-related measures in the budget are the rates waiver and the increased commitment to the small- and medium-sized enterprise loan guarantee scheme," points out Florence Chan, deputy chair of the institute's taxation committee. "While the budget mentions the need to expand Hong Kong's double taxation network and to strengthen the city's pillar industries, it doesn't propose enough specific measures."
Expanding Hong Kong's network of double taxation agreements would encourage trade, according to tax experts. Singapore now has 67 DTAs, the mainland has 93 and Hong Kong has 18, which means there is considerable room for improvement, Chan says.
According to Ayesha Macpherson, chair of the insitute's taxation committee, reinforcing Hong Kong's pillar and new industries, such as financial services, innovation and technology, and regional operations can be done with the right tax measures. She says not enough measures were introduced in the budget, nor was the institute's call to lower taxes for small companies with gross reveneu of less than HK$2 million. "Hong Kong's competitors are making good use of their tax systems to attract business; so we cannot afford to be complacent," she says.
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