Lam to cut taxes to promote HK as financial centre

Hong Kong’s newly appointed Chief Executive Carrie Lam is to offer tax incentives to enable the city to flourish as an international financial centre.

In a speech hosted by Reuters in Hong Kong, Lam said that the financial sector is the largest contributor to the city’s GDP at 18 per cent, employing 200 thousand people. A new ‘fiscal philosophy’ will be adopted by Lam’s administration to ‘spend in areas that will bring return’, such as investing in a ‘training hub for financial talent’, as well as increasing the city’s attractiveness by improving housing stock.

Lam said that her administration will also conduct more bilateral and multilateral agreements to develop government to government (G2G) relations in order to facilitate the growth of international finance in Hong Kong, citing the opportunities of the Belt and Road Initiative (BRI), in which Hong Kong can play a lead role.

Hong Kong has healthy fiscal reserves that enable a simple tax regime and low tax rate said Lam, but the tax system needs to be more competitive to ‘beat other economies’.  New measures for tax reduction include profit tax for start-ups and other corporations, which will be lowered from 16.5 per cent on the first two million of profits, plus ‘super deductions’ tax breaks on Research and Development spending.

Carrie Lam will host a ‘tax summit’ later this year to consider further competitive tax reform for Hong Kong.