Financial News
Written by: Xu Shihao
2021-02-18 12:56
The last update date: 2021-02-18 12:57
Under the new crown epidemic, the unemployment rate has risen and the economy has deteriorated. The government has introduced a number of one-off measures in the past year, such as the establishment of an anti-epidemic fund and the launch of the "Ensure Employment" plan, which has greatly increased fiscal expenditure. KPMG estimates, 2020/21 In the fiscal year, Hong Kong will record a fiscal deficit of 282 billion yuan, which is better than the government's revised estimate of 310 billion yuan, but it has reached a new high in nearly 20 years.
KPMG: No structural deficit
KPMG said that in addition to the increase in anti-epidemic expenditure, the increase in government recurrent expenditure and the decrease in taxation and land sales revenue are also the main reasons for the huge deficit. However, the stock market was booming last year and related stamp duty revenues were better than expected, which helped ease the fiscal deficit.
It is also estimated that the fiscal reserves in March this year will be 878 billion yuan.
KPMG China Corporate Tax Consulting Partner Liang Aili said on the conference call that the current fiscal reserves are sufficient for 22 months of expenditure, and the government should continue to invest resources to develop the economy under a sound financial situation.
He Jiahui said that whether to increase stock stamp duty should consider whether it will affect Hong Kong's competitiveness.
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Should not make a hasty decision to increase a certain tax
There are voices in the community that the government should consider increasing stamp duty or capital gains tax to increase revenue.
He Jiahui, a partner of KPMG China's corporate tax consulting, pointed out that whether to increase taxes should not be considered for a certain type of tax.
He explained that the stock stamp duty of neighboring countries and regions has to be considered whether the increase will affect Hong Kong's competitiveness.
He also said that sometimes tax cuts can attract more business activities to Hong Kong and increase tax revenue.
Leung Aili added that the fiscal deficit is mainly due to the introduction of a number of one-off measures. Hong Kong is not considered to have a structural fiscal deficit. The last time the government reviewed the tax system was 20 years ago, and it concluded that the tax base was narrow.
However, Hong Kong has experienced fiscal surpluses over the years, reflecting the change in the current fiscal revenue mix, which is already different from that of the previous year. It is time to review the tax system comprehensively.
Aili Leung (left) said that the government should conduct a comprehensive review of the tax base.
(Provided by KPMG)
10,000 yuan electronic consumer coupons should be sent
Regarding the economy, KPMG encourages the government to consider distributing a $10,000 electronic consumer voucher to each Hong Kong permanent resident aged 18 to 69 for specific general consumption, food and entertainment; Hong Kong permanent residents over 70 can use the Old Age Allowance Receive HK$10,000 in cash.
He Jiahui pointed out that the distribution of electronic consumer vouchers takes into account the fact that cash is issued or some citizens use it for savings or travel, which may not fully revitalize the local economy.
KPMG also recommends that the government provide tax allowances for rental expenditures on residential properties, as well as provide additional resources and funds for the government and non-government departments to create more jobs.
It is also recommended to provide tax allowances to working families who employ domestic helpers in authorized institutions, and to provide a tax allowance of HK$50,000 to working parents to support working parents to take care of children or disabled dependants aged 16 or under through their grandparents.
In addition, KPMG suggests that in order to further strengthen Hong Kong’s position as a leading asset and wealth management hub in the region, the authorities may consider measures, including the establishment of a new entity category of "individual investment companies", tax incentives, and expansion of existing fund tax exemptions The system covers investments made by family office funds to increase Hong Kong’s attractiveness to family office business.
KPMG recommends that the authorities adopt a series of economic measures to assist local enterprises, including allowing the tax losses of the current year to deduct the taxable profits of the previous year.
(Provided by KPMG)
In the short and medium term, KPMG recommends that the authorities adopt a series of economic measures to assist local companies, including allowing the tax losses of the current year to deduct the taxable profits of the previous year in one go, and refunding the excess taxes paid up to a limit of $100,000; Provide one-off subsidies to eligible companies that have recorded a certain amount of tax losses; delay tax declaration and tax payment for three months; and exempt 50% of the provisional tax for 2021/22.
KPMG also proposes to exempt the rates for the four quarters of 2021/22 for each rateable property.
KPMG budget