This report outlines the proposed changes and provides commentary on their implications.
On 24 February 2016, the Honourable John Tsang Chun-wah, Hong Kong Financial Secretary, delivered his ninth Budget Speech to the Legislative Council. KPMG China's Budget Summary outlines the proposed changes and comments on their implications.
The Budget speech reflects in many ways a ‘business as usual’ approach, with few substantial new or longer term initiatives introduced or flagged. One-off relief measures such as reductions in Profits Tax and Salaries Tax payable for 2015/16, increases in personal allowances, and waivers of rates and fees continue to be a recurring theme. Particular industries highlighted for additional/specific support included the tourism industry.
The Financial Secretary also discussed what he described as the ‘New Economic Order’. In his view, key to embracing this is nurturing innovation, and he highlighted a series of achievements and future initiatives. He also mentioned KPMG as being one of the international firms which have chosen to establish laboratories and incubation programmes in Hong Kong. Unfortunately, however, the proposals stopped short of where certain other jurisdictions have particularly headed, for example, in the case of tax incentives for research and development activities.
While many of the one-off or short-term measures are welcome, there continues to be little in the way of obvious long-term/strategic focus on the part of government. The key exceptions to this are the Housing Reserve set up in support of public housing development, the HKD 200 billion set aside for the 10-year hospital development plan, and the Future Fund. All of these are positive moves. On a separate note, we look forward to the government’s early implementation of the few new matters raised, as well as those raised in prior years.