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Hong Kong To Receive SME Tax Cuts Under New Chief Executive

by Mary Swire, Tax-News.com, Hong Kong

14 February 2017

The two leading contenders in the 2017 Hong Kong Chief Executive (CE) election scheduled for March 26 have both proposed tax policies favoring the city's small- and medium-sized enterprises (SMEs).

Former Chief Secretary Carrie Lam, who has said she will not provide a full manifesto until March, told a February 13 press conference she would reduce the tax burden on SMEs and provide additional business investment incentives.

Firms with annual earnings of less than HKD2m (USD258,000) would, she said, be able to pay a profits tax rate of 10 percent, rather than the normal 16.5 percent tax rate. There would be "super deductions" for investments in innovation and technology, research and development, environmental protection measures, arts and culture, and design, she added.

In his already published election manifesto, former Financial Secretary John Tsang also noted that he would "research and examine the possibility of introducing a progressive profits tax to lessen the burden on SMEs."

In addition, he confirmed that he would "investigate the feasibility of introducing a negative income tax, under which people whose income falls below a certain level need not pay tax and may receive a government allowance."

"Such measure would not only help improve the livelihood of low-income families, but may help rationalize the current welfare system as well," he said.

Although Lam is widely considered to be Mainland China's favored candidate for what is Hong Kong's top post, Tsang is currently leading in the opinion polls.

TAGS: individuals | tax | investment | business | corporation tax | tax rates | Hong Kong | tax breaks | individual income tax | research and development | business investment

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