CPA Australia Welcomes Hong Kong Budget 2020-21

HONG KONG, CHINA – Media OutReach – 26 February
2020 – CPA Australia, one of the world’s largest professional accounting
bodies, has given its backing to HKSAR Government Financial Secretary Paul
Chan’s fourth Budget Speech, and described it as a comprehensive package of
measures to counter the negative impacts of a multitude of challenges including
the COVID-19 outbreak. CPA Australia would give a score of 85 out of 100 to
this year’s Budget.

“We welcome the Government’s HK$10,000 cash payout scheme as
a response to the economic downturn. This is an effective and timely measure to
relieve people’s economic burden. However, we consider a limited-life coupon
scheme to be more effective as it will directly contribute to increasing local
consumption and boosting the local economy,” said Anthony Lau, President of CPA
Australia Greater China 2020.

“Besides, we welcome the series of measures rolled out to
help SMEs. Regarding the SME Financing Guarantee Scheme, CPA Australia recommends
the Government to establish an ‘SME Emergency Assistance Fund’ to provide
additional cash subsidies to SMEs of up to 10 per cent of the approved loan
amount, subject to a ceiling of HK$200,000. This will further help SMEs manage
through current economic challenges,” Anthony said.

“At the same time, as SMEs applying for the SME Financing
Guarantee Scheme may have to wait for the bank to approve for the loan, causing
a time lag, and as the final approval is determined solely by the bank, SMEs
may still face significant cash flow problems. Therefore, we recommend that the
employer’s contribution to the Mandatory Providence Fund (MPF) be covered by
the Government for six months.”

“We also recommend that SMEs and individuals be waived from
the 2019-2020 provisional tax,” Anthony added.

“For the final 2019-19 tax payment, if SMEs are experiencing
cash flow problems, CPA Australia recommends that the Inland Revenue Department
offer the option of deferring 12 months instalment without surcharge for SMEs.
In the long run, we also suggest the Government to introduce tax loss carry
back to support SMEs.”

“In addition, we welcome the Government to attract more
private equity funds to operate in Hong Kong by providing tax concession for
carried interest issued by private equity funds operating in Hong Kong subject
to certain conditions. To further support the financial industry, CPA Australia
believes that details of this measure be published as early as possible, and
that the Government should actively consult with stakeholders and professionals
when developing and implementing these measures.

“Regarding the fiscal deficit and a deficit forecast in each
of the coming five financial years, CPA Australia believes that as the
Government still possess a fiscal reserve of HK$1.13 trillion, Hong Kong’s
financial situation remains sound and robust. The fiscal deficit for next year
is expected to be HK$139.1 billion, however if the cash payout scheme and the
other one-off relief measures are excluded, the fiscal deficit will be about
HK$59 billion. This is equivalent to about two per cent of GDP, which is still
below the internationally accepted level of a budget deficit of three per cent
of GDP. Besides, as Hong Kong faces the challenges of an ageing population and
changes in the global tax environment, CPA Australia recommends the Government
to conduct a comprehensive tax reform review for the city’s long-term
development,” Anthony said.

About CPA Australia

CPA Australia is one of the world’s largest accounting bodies with more than 165,000 members working in
150 countries and regions around the world, with more than 25,000 members working in senior leadership
positions. It has established a strong membership base of more than 19,000 in the Greater China region.