In recent years, consumption activities carried out on the Internet have become very popular. As the costs of running online businesses are relatively low, many people (especially young people) have chosen to start their businesses online by selling products through channels such as online stores set up by them, auction web sites and online social platforms. It is learnt that some owners of online stores have neither applied for registration of their businesses in accordance with the Business Registration Ordinance (Cap. 310) nor furnished tax returns to the Inland Revenue Department (IRD) pursuant to the Inland Revenue Ordinance (Cap. 112). In this connection, will the Government inform this Council:
(1) whether it has conducted surveys on the situations of online consumption activities of and online businesses operated by Hong Kong people; if it has, of (i) the total amount of online consumer spending, (ii) the number of online stores established and (iii) the average age of the owners of online stores, in each of the past three years; if not, whether it will conduct such surveys;
(2) as the Business Registration Ordinance provides that all businesses carried on in Hong Kong must apply for business registration within one month of the commencement of such businesses, whether the authorities have conducted any survey on the respective numbers of online stores, in each of the past three years, which had not applied for business registration nor furnished tax returns to IRD; whether they will step up law enforcement efforts in this respect;
(3) whether it has studied taking measures to encourage young people to run online businesses, e.g. providing tax concessions, improving the online business environment, etc.; whether it will, by making reference to the “Loans for Young Entrepreneurs and Start-ups” scheme launched by the Taiwanese Government, improve the various existing funding schemes for young people starting up their businesses, so as to assist young people in obtaining business start-up capital more effectively; if it will, of the details; if not, the reasons for that; and
(4) whether the Government currently provides young people with support about networking technology and training on entrepreneurial knowledge (including the procedures for establishing online stores, risk management and basic legal knowledge) in respect of running online businesses; if it does, of the details; if not, the reasons for that?
My reply to the four-part question is as follows:
(1) The Census and Statistics Department (C&SD) conducted a Thematic Household Survey from June to August 2012 to collect information relating to the use of personal computer and Internet among households. The results show that the total amount spent by persons aged 15 and over in purchasing goods and services online for personal matters during the six months before the survey was about HK$3.79 billion. Figures for 2011 and 2013 are not available. On the other hand, according to the results of C&SD’s Survey on Information Technology Usage and Penetration in the Business Sector for 2013, which covered around 297 400 establishments, the proportion of establishments receiving orders online (e-commerce sales) was 4.3 per cent. However, the survey did not collect breakdown figures relating to “online shops”. Information on the average age of proprietors of “online shops” is not available.
(2) Under the Business Registration Ordinance (BRO), except those specifically exempted, every person carrying on a sole proprietorship or partnership business in Hong Kong regardless of the mode of operation is required to apply for business registration within one month of commencement of business. If a business conducted through the Internet is carried out in Hong Kong, the person carrying on that business is required to apply for business registration under the BRO. Over the past three years (i.e. from 2011-12 to 2013-14), the Inland Revenue Department (IRD) checked a total of 3 258 online businesses and found that 218 of them had not been registered. Upon IRD’s advice, these online businesses have subsequently applied for business registration. As for businesses which did not file tax return, IRD does not keep breakdown figures by sector.
The IRD will continue to monitor the situation and conduct enforcement actions. If any business operator does not apply for business registration despite IRD’s advice, or fails to file tax return in a timely manner, IRD will consider instituting prosecution in accordance with the law.
(3) The Government encourages and facilitates businesses including young people to take advantage of the booming trend of e-commerce to engage in online business. In line with free market principles, the Government is committed to creating a facilitating environment for online business to flourish in Hong Kong, including developing a robust information and communications technology (ICT) infrastructure, providing a legal framework for online business (e.g. Electronic Transactions Ordinance which accords electronic record and electronic signature the same legal status as that of their paper-based counterparts), and steadfast protection of information security.
Different organisations in Hong Kong offer various measures to assist young people to start up business. For example, the “Youth Business Hong Kong” programme operated by Hong Kong Federation of Youth Groups provides business startup loan and information on setting up and running business. The Hong Kong Mortgage Corporation Limited has launched the “Micro Business Startup Loan”, in collaboration with banks and a number of non-governmental organisations, to assist individuals aged 18 or above to start their own businesses. It also provides entrepreneurial training and other support services to business startups.
(4) In recent years, the local technology startup ecosystem is developing rapidly. More support measures for startups have correspondingly been introduced. Many non-governmental organisations, private companies and large-scale enterprises provide a variety of initiatives such as co-working spaces and incubation programmes for startups, including technology startups. These initiatives, which are increasing in terms of both number and diversity, are very popular, demonstrating that these initiatives can meet the needs of startups and that many young people are active in starting up technology undertakings.
The Office of the Government Chief Information Officer launched earlier this year the interactive portal iStartup@HK, which is dedicated to technology startups. The portal allows startups to upload their profiles and product information to reach out to investors. The portal also provides a comprehensive range of practical information for startups, including information on co-working spaces, incubation programmes, as well as various loan and funding schemes. Moreover, the portal provides templates of various business and legal documents, including the Incorporation Form from the Companies Registry and examples of successful applications for funding. Moreover, the portal also features information regarding application for grant of patents, design registration and trademark registration. Furthermore, Hong Kong Cyberport Management Company Limited, Hong Kong Science & Technology Parks Corporation and Hong Kong Design Centre also run incubation programmes to provide all-rounded support to startups in the technology and design sectors.
In respect of doing business online, there are courses on the market offering training on operational strategy and selection of platforms for online sales, taxation, etc.