Financial Secretary Chan Mo-po will announce a new budget next Wednesday (23rd).
Due to the higher-than-expected land sales revenue in the current financial year, the increase in the stamp duty rate for stock transactions, and the booming property transactions, it is expected that the government's fiscal deficit will be significantly reduced from the original estimate of 102 billion yuan.
Accounting firm KPMG expects the government's annual budget deficit to be 37 billion yuan.
KPMG China pointed out that the government's fiscal deficit was greatly reduced, mainly benefiting from better-than-expected land-related revenue and an increase in stamp duty revenue.
KPMG China expects the Hong Kong SAR government's fiscal reserves to be HK$891 billion by the end of March 2022.
Tam Pui Li, Partner, Tax Services, Hong Kong, KPMG China, said: "Despite the third consecutive year of deficit, Hong Kong's fiscal position remains solid. Hong Kong's fiscal reserves are well-positioned to meet the challenges ahead, even if Hong Kong's future fiscal position will depend on Hong Kong's economy has been showing resilience during the pandemic amid economic recovery in neighboring regions and around the world. We should leverage Hong Kong's strategic position as an international financial center to attract foreign investment and strengthen our competitiveness."
Although the impact of the new crown epidemic continues, KPMG China expects that Hong Kong's fiscal reserves will remain at a healthy level. The government should make good use of the fiscal reserves to assist citizens and businesses whose livelihoods have been hit by the epidemic.
Call on citizens to defer payment of salaries tax
KPMG suggested that the government launch a new round of targeted "employment protection" schemes, targeting citizens employed in industries that have not seen recovery since the outbreak of the epidemic, and consider providing "negative tax rates" for eligible enterprises. A one-time subsidy is provided for tax losses of RMB 10,000.
At the same time, the government should consider allowing the public to defer payment of provisional salaries tax and reduce quarterly rates in 2022/23, with a quarterly reduction of $2,000 for each rateable property.
The accounting firm also suggested that the government should distribute consumer coupons again.
Ellie Leung, KPMG China tax partner, said: "The government needs to gradually stimulate the economy and prepare for recovery. In addition to launching a new round of targeted 'employment protection' programs, we recommend that the government provide every Hong Kong 18 to 69-year-old with Permanent residents issued a new round of electronic consumer vouchers of 5,000 yuan, and designated part of the amount to be used for specific industries such as catering and leisure and entertainment. We believe that the relevant measures can not only benefit specific industries affected by the epidemic, but also stimulate the economy. Purpose."
In the long run, the Government should enhance Hong Kong's competitiveness in the Asia-Pacific region by attracting foreign investment and promoting local employment.
KPMG China proposes that the government can levy a halved profits tax rate (ie 8.25%) on companies that set up regional headquarters in Hong Kong to attract foreign businessmen to Hong Kong.
In addition, as the international tax environment continues to evolve, the Government should improve Hong Kong's tax system to remain competitive.
Budget | Lin Zhiyuan estimates that the warehouse will receive 50 billion yuan, saying that 60% of the people will support the distribution of 5,000 yuan consumer coupons. Budget plan to distribute consumer coupons again?
Xu Zhengyu: It is inconvenient to discuss the budget plan in detail | Chen Maobo: Open attitude towards the distribution of consumer vouchers must consider the government's financial burden. 10,000 yuan Budget | Group pretends to be the God of Wealth and petitions to urge the wealthy to send another 10,000 yuan or consumer coupons to help the people
