HONG KONG SAR - Media OutReach - 27 January 2022 - Facing a fifth wave
of Covid-19, Hong Kong's near-term economic outlook is increasingly uncertain,
according to one of the world's largest professional accounting organisations. To
boost confidence and protect recent economic gains, CPA Australia recommends
the government offer an enhanced version of
the electronic consumption voucher in the upcoming budget.
Australia estimates the Hong Kong SAR Government will record a HKD37.1 billion fiscal
deficit for 2021-22 and fiscal reserves will be HK$ 865 billion.
These estimates take into consideration projected revenue, expenditure
and adjustments for the year.
Mr Anthony Lau, Co-Chairperson
of CPA Australia's Taxation Committee – Greater China said, "As
one of the earliest proponents for the distribution of consumption vouchers
to support the local economy, we are delighted to see the better-than-expected results
of the consumption voucher scheme. Our members tells us the scheme has supported
many businesses through increased customer spending and accelerated digital
"This year, we recommend the government
consider offering an enhanced two-tier version of the
scheme to help defend the economy from the fifth Covid-19 wave by boosting
local consumption. Subject to
affordability, the base amount could be up to HK$3,000 for all eligible Hong
Kong residents. The second tier, targeting vulnerable groups such as low-income
earners, could receive an additional payment of up to HK$3,000 to
alleviate their financial burden. These vouchers will continue to promote the uptake of digital payment technologies in Hong Kong.
"Further, we recommend that the government consider introducing a one-time
tax deduction for quarantine expenses for hotel accommodation with a suggested cap
of HK$50,000, as well as introducing a one-time tax deduction for additional
costs incurred by employees in working from home, capped at around
"Other measures could include increasing child allowance to HK$150,000 per
child and expanding the dependent parent allowance and dependent grandparent
allowance to include dependent parents and grandparents residing outside of
Mr Janssen Chan, Co-Chairperson of CPA Australia's Taxation
Committee – Greater China said, "According to the latest government
figures, monthly average over 100,000 private sector job vacancies were
recorded in the fourth quarter of 2021, representing a surge of nearly a 75 per
cent year-on-year. Labour and talent shortages at
this level present a real risk to Hong Kong's economic
growth and long-term competitiveness.
government consider introducing measures to address this issue, such as
allowing non-local students to stay longer in Hong Kong. This could be done by extending
the initial 12 months time limitation under the Immigration Arrangements for
"Facing the dual challenges of labour and
talent shortages and an ageing population, the government should encourage more employers
to hire or reemploy Hong Kong residents aged 60 and above. To achieve this, we suggest
increasing the maximum amount
of on-the-job training allowance for employees aged 60 and over under the Employment Programme
for the Elderly and Middle-aged to HKD8,000. The government should also consider introducing an additional tax deduction on
salaries for companies hiring employees aged 60 and over, with a suggested cap
of HK$120,000 per employee per year. We hope the government will invest
sufficient resources to address these perennial societal issues."
Chan said, "We are pleased that the government acted
quickly in response to the fifth Covid wave by announcing further support for
hard-hit sectors through the HK$ 3.75 billion fifth round of the Anti-epidemic
Fund. However, based on experiences in other markets, we expect the negative
impacts on businesses of this wave will last
for several months, especially for SMEs.
"Given the uncertain short-term business outlook created by the fifth wave,
we suggest the government consider introducing a series of measures to support
SMEs. These include extending the maximum duration of principal moratorium to
30 months for the 80 per cent Guarantee Product, 90 per cent Guarantee product
and Special 100 per cent Loan Guarantee under the SME Financing Guarantee Loan
Scheme. The application period for the Special 100 per cent SME Financing
Guarantee Loan Scheme should also be extended to the end of 2022. The
Pre-approved Principal Payment Holiday Scheme should be extended until the end
of October 2022.
Lau added, "Sixty-seven per cent of surveyed members recently stated they
are waiting on the details of the tax concession for family offices before
taking action. We therefore suggest that the government expedite the release of
the tax concessions regime for family offices."
Lau said, "Eighty-four per cent of surveyed members
believe that changes should be made to the Hong Kong tax system as a response to
the city's inclusion in the European Union's "Grey List" of non-cooperative tax
jurisdictions. Further, 39 per cent believe that the proposed global minimum tax regime will be a significant concern
to their organisation's growth objectives.
"With these developments creating uncertainty for businesses, we suggest
the government announce measures to address the city's inclusion in the "Grey
List" and provide details on how they will respond to BEPS 2.0, including
clarity on the implementation of a domestic minimum tax.
"To maintain Hong Kong's international competitiveness in a changing tax
environment, we suggest the government commission a comprehensive reform of the
tax system. Such a review should focus on the three 'Cs' – certainty, clarity