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The Chief Executive Ms. Carrie Lam delivered her first Policy Address (“the Policy”) on 11 October 2017. It is important to note that at this stage all these initiatives proposed in the scheme are subject to approval by the legislative council and if approved, they will be effective in 2018.
Among all these reforms, the most impactful for SMEs will be the substantial tax relief provided by the reduction of profits tax rate from 16.5% to 8.25% on the first HKD 2 million profits (note that only one enterprise nominated by each business group will be eligible for the lower tax rate).
But in addition, it seems that the government wants to use research and development (R&D) as one of the vectors of growth. So, they also intend to introduce, for all companies, a 300% tax deduction for the first HKD 2 million eligible R&D expenditure (a further 200% deduction will apply to the remaining expense).
On top of the proposed tax concession, a budget of HKD 2 billion has been allocated to the Innovation and Technology Venture Fund Scheme to invest in local startups. The aim is to stimulate private investment in local innovation and technology (I&T) startups.
Moreover, an investment of HKD 10 billion will be made into university research funding to push company investment in research and development. While the government also intends to kick-start the “Technology Talent Scheme” with an investment of 3 billion to support postgraduate research programs and subsidize local businesses on a matching basis for training their staff on advanced manufacturing technologies.
You can download the full document “Chief Executive’s 2017 Policy Address”, or check out the highlights here relating to other areas such as land and housing, building safety, healthcare, environmental hygiene, education, etc.
If you want to know more about HK Companies in general, send us an email: infohk@orbis-alliance.com
By Francois Bernard, Orbis HK consultant.
Source : https://www.policyaddress.gov.hk/2017/eng/index.html