NEWS
Mar-25-2009 The AFP Group – 2008/2009 Hong Kong Budget Commentary
29 February 2008
Strong economy, further tax concessions, commitments to long term
improvements and time for a celebratory drink!
With the benefit of strong economic growth in 2007 the Hong Kong government now has a significant surplus to
allocate and the budget announced today by the Financial Secretary, Mr. John Tsang, set out their intentions and
aspirations. Some of the key announcements were:
- Reductions in personal, corporate and property taxes have been announced.
- Major expenditure on infrastructure development and the additional intention to build a new runway at HKIA and a tenth sea container terminal were announced.
- The continued commitment to improving education and a good quality workforce was reflected in increasing state funded education and skills training.
- Plans to increase the land supply and re-site government offices outside the central business district were announced in recognition of the shortage of supply and high prices of commercial and residential accommodation.
- Perhaps the greatest surprise of relevance to our clients is the removal of the requirement for business registration fees, which will make it even more attractive to establish companies in Hong Kong.
- There were also announcements that both the Companies Ordinance and Trustees Ordinance would be reviewed to simplify the rules whilst preserving proper legal and regulatory protection.
- Considerable emphasis was placed on ensuring Hong Kong remains the preferred Asian city for headquarters for operations throughout Asia. The main emphasis is on continuing improvements in the already advantageous tax and trade agreements with mainland China, but also facilitating business with India and Vietnam particularly.
- Visitors to Hong Kong will be delighted to hear that more hotel developments are being encouraged and hotel tax removed.
- Most alcoholic drinks are having duty removed with immediate effect in an effort to stimulate Hong Kong’s development as the Asian centre of the rapidly growing wine trade. Clearly the financial secretary is not a whisky drinker however - spirits are excluded.
- Smaller concessions were made to welfare, environmental and health care improvements. Special emphasis has been placed on reducing air pollution, with tax concessions on green vehicles and machinery. Despite the government showing clear awareness of competition from other territories we are of the opinion that more could have been done for businesses, especially in the financial services sector. We had hoped to see initiatives such as reductions or removal of stamp duty on the transfer of Hong Kong stock, incentives for the capital market, fund management and trust administration sectors, but the budget was silent on these points. Nevertheless, when one considers the situation in Hong Kong relative to London or New York, for example, Hong Kong looks far more attractive as a place to do business, economically, geographically and commercially.
