KP Chan on encouraging multi-national companies to establish their regional headquarters in Hong Kong:
The Deputy Chairman [KP Chan] remarked that with an improved economy, the whole community would benefit. The Government should therefore consider offering concessions/incentives to encourage multi-national companies to establish their headquarters in Hong Kong so as to promote Hong Kong’s economy and create more job opportunities. The Deputy Chairman [KP Chan] opined that if the Government could not introduce, in the near term, any systemic reform to the taxation system for purposes including wealth re-distribution, one-off relief measures were still required to relieve the financial burden of the needy. The Deputy Chairman [KP Chan] noted with grave concern that of the 633 000 registered corporations, only 80 000 or 13% paid profits tax, and nearly 90% of the corporations did not pay any tax. The Deputy Chairman [KP Chan] remarked that the Government should check whether the situation was in line with that of other jurisdictions, or whether there were any loopholes in the profits tax system.
The Financial Secretary shared the view of the Deputy Chairman [KP Chan] that all strata of the community would benefit from the improvement of the economy. Efforts were being made to explore new markets for Hong Kong’s exports, and during his overseas visits, e.g. in Chile and Brazil, he would encourage overseas companies to set up their regional headquarters in Hong Kong. The Financial Secretary said that the fact that only 13% of the corporations registered in Hong Kong were paying profits tax was mainly a result of the taxation policy over the years to grant different types of concessions and allowances to businesses. The Permanent Secretary for Financial Services and the Treasury (Treasury) supplemented that the Government aimed to provide an environment to facilitate business and promote entrepreneurism. The threshold for payment of profits tax in Hong Kong was lower than that of other jurisdictions. Many companies might not be making profits and hence were not subject to profits tax, resulting in a narrower tax base.