Hong Kong’s new Chief Executive, Carrie Lam, has issued new proposals that could benefit Hong Kong’s SMEs (small and medium enterprises) with further tax breaks, if the suggestions are approved.
Lam also recommended the introduction of a two-tier profits tax rate system. Following this, Lam suggests to reduce the profits tax rate for the first HK$2 million of profit (USD $256,000) to the lower rate of 10% from the current 16.5%.
The Chief Executive, who took office on the 1st of July, further proposed the idea of additional tax reductions on business spending for research and development activities.
However, the Special Administrative region has an appealing low tax rate and duty-free status at present. Non-resident companies, such as branches in Hong Kong, could potentially benefit from a preferential profits tax treatment under certain circumstances. In addition, double taxation relief is also possible for corporations that receive income from both Hong Kong and other countries with which the city has signed a double tax treaty.