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Tax and industries viewpoints
Viewpoints from our tax leaders
The 2023/24 Budget strikes a delicate balance between fiscal prudence and support as costs rise
“Over the past three years, Hong Kong has demonstrated the ‘Lion Rock spirit’ as we rode through the disruptions brought by the pandemic together. While escalating geopolitical tensions, supply chain disruptions, elevated inflation, and soaring interest rates will continue to pose challenges to Hong Kong, the Financial Secretary is treading carefully on the road to recovery.
With an estimated deficit of about HK$140 billion for this financial year and another deficit of approximately HK$54 billion in the next financial year, the Financial Secretary formulated a well-calibrated budget that balances public expectation against shrinking reserves to safeguard people’s livelihood and drive economic growth. Overall, the 2023/24 Budget emanates positivity for Hong Kong’s future. Short-term measures such as the repeat of consumption vouchers, tax reduction and rates concession can address pressing issues. The adjustment to the value bands of the ad valorem stamp duty payable should ease the financial burden of first-time local homebuyers, while not expected to pose a significant burden on the Government coffers.
Strategic long-term initiatives include the proposed introduction and refinement of various preferential tax regimes, enhancement to listing rules and introduction of a redomiciliation regime should make Hong Kong a resilient city. It is important that these initiatives are formulated in a competitive and commercially feasible way to boost the economy in a sustainable manner and attract more talents. We hope that the Government will execute these measures efficiently and effectively to ensure that the community can benefit from them as intended.”
— Charles Lee, PwC South China (incl. Hong Kong SAR) Tax Leader
Response to public opinion
“We are pleased to see that the Budget reflects the Financial Secretary has taken into consideration a number of concerns raised by businesses and recommendations from the profession (including PwC), such as the proposal to provide tax deduction for spectrum utilisation fees (SUFs) to be paid by future successful bidders of radio spectrum to alleviate the cost burden of telecommunications network operators; the proposal to implement a patent box tax concession regime for onshore intellectual property income to encourage more local research and development activities; and proposal to enhance the aircraft leasing preferential tax regime to further develop Hong Kong as an aircraft leasing and services hub in the region.
In implementing these proposals, we urge the Government to take a liberal approach to ensure that the specific business needs can be addressed going forward and also certain historical issues can be resolved pragmatically.”
— Agnes Wong, PwC Hong Kong Tax Partner
Comments on Hong Kong’s implementation plan of GloBE rules
“The implementation of a 15% global minimum tax on large multinational enterprise (MNE) groups under Pillar Two has gained momentum globally since December 2022. Several major economies such as the European Union, Japan and South Korea have announced their plans to make the rules effective in 2024. The Financial Secretary announced that Hong Kong will only implement the rules for large MNE groups in 2025. Notwithstanding the 2025 start date, certain large MNE groups may still be impacted in 2024 due to other jurisdictions’ implementation. Affected businesses should therefore continue gearing up their people and system for the complicated rules.
Nonetheless, this early announcement gives the much needed certainty to businesses about Hong Kong’s tax policy direction. It is also reassuring that a public consultation will be launched to allow MNE groups to make early preparation. In formulating the implementation of the rules, it is important for the Government to provide clear guidance and ease the compliance burden for affected MNE groups.”
— Kenneth Wong, PwC Hong Kong Tax Partner
Talk to our tax professionals
Viewpoints from our industry leaders
What the Budget means for financial services, technology, digitalisation, infrastructure projects, capital markets, and aviation?
0:00:50
Talk to our industry professionals
Global Technology, Media and Telecommunications Industry Leader and China Artificial Intelligence Leader, Shenzhen, PwC China
+[86] (755) 8261 8886
Capital Markets and Accounting Advisory Services Leader, Beijing, PwC China
+[86] (10) 6533 2068
2023/24 Tax facts and figures
The information in this booklet is based on taxation laws and practices as of 22 February 2023 and incorporates legislative proposals and measures contained in the 2023/24 Hong Kong Budget announced on the same date.
Note: Legislative proposals do not become law until their enactment and may be modified by the Legislative Council before being enacted.
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