Tax and accounting experts said on Thursday they believed that Hong Kong's move to review the city's tax regime, as proposed in the financial secretary's latest budget blueprint, could possibly broaden the tax base and make the SAR a more attractive place for firms and people with talent.

The financial secretary announced in his budget on Wednesday that he would establish and chair an Advisory Committee on Tax Policy to review the SAR's competitiveness.

Speaking on RTHK's Backchat programme, Stephen Law, president of the Hong Kong Institute of Certified Public Accountants, noted that the current tax system has remained the same for decades.

"Hong Kong's tax system has not been reviewed for at least 30 years. Therefore, it's about time to review the tax system," he said.

"I want to emphasise a review of tax system doesn't mean more taxes, it could be a reduction of certain taxes too.

"But our tax system must be updated. For example, now we have a lot of e-commerce, key opinion leaders – and all these people are probably not paying taxes."

Desmond Wong, a council member of the Taxation Institute of Hong Kong, suggested that the administration look into areas that can help make the existing tax policy more attractive, particularly in the digital and innovation technology sector, so as to attract more enterprises and talent here.

As for the plan to transfer HK$150 billion from the Exchange Fund into the Capital Works Reserve Fund over the next two years to support development of infrastructure projects, including the Northern Metropolis, Wong said the public did not have to be too concerned about the city's financial health.

"Our current debt-to-GDP ratio actually is still pretty healthy. As [for] what the FS has mentioned in the medium forecast, we are still achieving an overall surplus in the coming few years," he said.

"So even if we [are] doing the transfer of the money, if we are looking at the overall picture, we are still achieving an overall surplus, and the debt ratio is still relatively healthy."

According to the financial blueprint, the ratio of government debt to GDP will rise from 14.4 percent to 19.9 percent over the next few years.

While it is crucial to focus on the the city's finances, Wong said, Hong Kong also needs to develop major projects at the same time so as to allow future generations to be embraced by the opportunities that innovation and technology bring.



Edited by Thomas McAlinden