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On March 26, Carrie Lam was elected Hong Kong's new chief executive, with a promise that she would pursue a "new tax policy direction" in the territory.
In her manifesto, Lam promised to maintain Hong Kong's simple tax regime and low tax rates and encourage research and development (R&D), which accounts for a small proportion of the territory's gross domestic product (GDP) relative to Hong Kong's regional peers.
She said that Hong Kong should introduce additional tax breaks for R&D expenditure to ensure that Hong Kong's regime is competitive with other territories. Additional tax deductions may also apply to spending on environmental protection initiatives, culture, arts, and design, she said, to promote the development of these industries.
Lam also promised a reduction in the tax burden for small, medium, and startup enterprises. She said she would look to lower the tax rate from 16.5 percent to ten percent on the first HKD2m (USD257,460) of a company's profits.
Lam said the territory would consult with stakeholders on any changes and also seek to expand its double tax agreement network.
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