Hong Kong should provide more tax concessions to individuals and businesses in the coming fiscal year, according to the Hong Kong General Chamber of Commerce (HKGCC).

It made suggestions across nine categories about the Budget, which is set to be released later this month, including suggestions on expenditure control and attracting foreign investment.

Last December, officials said the deficit would be near HK$100 billion, more than double the original estimate of HK$48 billion.

The chamber’s chairwoman, Agnes Chan, said the public should not worry though, as the city's economy is gradually recovering from the pandemic.

“The budget deficit at that time was caused by two major factors -- we have the employment subsidy, the e-consumption voucher. Both took the government [to] over a hundred billion [dollars in deficit]. So that contributed to that year's substantial budget deficit. Then the second year, 2023-24, and the border reopened in February, but we are recovering and the government had adopted a loose monetary policy," she said.

"This year, the financial secretary is already saying it's going to be a smaller deficit because we are in a fiscal consolidation year. The measures include raising taxes on the high income earners, and having the double-tier property tax," she added.

The HKGCC proposed a one-time exemption on salaries tax, personal assessment tax and corporate tax, with an upper limit of HK$3,000.

For small and medium sized enterprises, or SMEs, it suggested the government provide a long-term fixed-rate mortgage.

Chan said both measures could reduce the burden towards taxpayers and stabilise the operation costs of SMEs.

In terms of managing expenditure, she said a review of the government's structure would be needed, such as merging organisations with overlapping duties to cut costs.

She said an example would be the Office for Attracting Strategic Enterprises (Oases) and InvestHK, in which both offices aim to attract foreign investment.

The chamber also said the government could consider setting up a digital services tax, in which foreign telecommunication companies providing entertainment or consumption services in the city would have to pay up to five percent in tax per year.

As for foreign investment, it said a three-year tax exemption period could be granted to companies that relocate their headquarters back to Hong Kong.