Proposals to the Taskforce on Economic Challenges on Enhancing the Competitiveness of Hong Kong’s Tax System 向經濟機遇委員會 提交

1. Proposals to the Taskforce on Economic Challenges on Enhancing the Competitiveness of Hong Kong’s Tax System向經濟機遇委員會提交有關提升香港稅制競爭力的建議 Ayesha Macpherson 麥嘉軒 April 2009 2009年4月

2. In the context of the global financial crisis稅務政策在對抗全球金融海嘯的作用 Tax policy can be an effective tool to:- • 稅務政策能有效地： • help overcome challenges of the global financial crisis 協助應付全球金融海嘯帶來的挑戰 • support new business opportunities 支持開拓新商機 • enhance HK’s competitiveness 提升香港的競爭力 Terms of reference of TFEC include these objectives 經機會的職能範圍亦包括以上目標

3. Competitiveness of Hong Kong’s Tax System香港稅制的競爭力 Bauhinia Foundation Research Centre’s Report entitled “A Tax System to Enhance the Business Environment” (A copy of the report is available on the website www.bauhinia.org):- • 智經研究中心發表題為「有利營商環境的稅制」的報告（可於www.bauhinia.org • 網站下載） • Overall aim of the study研究目的:- • To make use of the tax system to enhance HK’s competitiveness 以改善稅制來提升香港的競爭力 • Study included研究包括:- • A literature review of recent competitiveness studies identifying the future macro-economic goals for HK 參考最近就香港競爭力的研究，以確定香港的未來宏觀經濟目標 • A survey of the HK business sector 向商界進行問卷調查 • Interviews of senior business executives 專訪商界人士 • Interviews of businesses that have recently relocated key functions in a competitor jurisdiction (e.g. Singapore and Macau) • 專訪近期把業務遷離香港到其他競爭地區（如：新加坡、澳門）的企業

4. Hong Kong’s Macro-economic Goals香港的宏觀經濟目標

5. Hong Kong’s Macro-economic Goals香港的宏觀經濟目標 Source:- Identified from a literature review of recent competitiveness studies 資料來源:- 從參閱就近有關競爭力的研究得出

6. Business Survey問卷調查

7. Business Survey Results問卷調查結果 Ranking of Important Factors稅制須具備的要素 Larger organisations viewed “Clear tax laws” as more important than “Low tax rates” 大型機構認為「清晰的稅法」比「低稅率」更重要 Importance of factors for a tax system to be favorable to business 對營商有利的稅制所須具備的要素 46% Low tax rates低稅率 59% Low tax rates 低稅率 36% Clear tax laws清晰的稅法 61% Certainty in the practical application of laws 稅法的實際應用夠明確 11% 51% Low compliance cost 低遵從成本 6% Clear tax laws 清晰的稅法 Targeted incentives 稅務優惠 More than 1,000 employees 員工人數超過1,000 35% 4% 1,000 employees or less 員工人數1,000名或以下 0 20 40 80 60 % 0 10 20 30 40 50 60 % of respondents from respective employee-size groups 受訪者佔所屬組別的比例(%)

8. Business Survey Results問卷調查結果 Other Key Issues其他主要議題

9. Business Interviews訪問商界人士

10. Business Interviews訪問商界人士 Summary of Perceived Strengths and Weaknesses of HK’s Tax System綜合受訪人士認為香港稅制的優點及弱點

11. Overview of Recommendations建議概述

12. Overview of Recommendations建議概述 Overall assessment總括評估 • Overall, HK’s current tax system is competitive 整體而言，香港目前在稅制方面仍具競爭力 • But with increasing global competition, HK cannot afford to rest on its laurels 但在全球競爭日漸激烈的情況下，香港絕不能安於現狀 • Must align HK’s tax system with macro-economic goals 稅制必須配合香港的經濟目標 • Study Group has five recommendations on fundamental issues and twelve detailed recommendations 研究小組提出了5項大原則上的建議及12項個別議題的建議

13. Recommendations on Fundamental Issues大原則上的建議

14. Recommendations on Fundamental Issues大原則上的建議 (1) Tax Policy Unit and Approach to Maintaining Competitiveness成立稅務政策組以維護競爭力 • Key roles主要角色: • Analyse and research on international trends • 研究及分析國際趨勢 • Review and formulate recommendations on how to improve and upgrade tax policies to meet HK’s economic and social objectives • 檢討與制訂相關建議以改善及提升稅務政策，配合香港的社會和經濟發展目標 • Implement tax changes • 執行稅法修訂 • Liaise and work with other bureaux to formulate tax policies in line with other government policy objectives • 與各政策局緊密聯繫，以制訂跟其他政府政策目標互相配合的稅務政策 • Solicit views from business and professional sectors • 徵詢商界及專業團體的意見 Financial Services and the Treasury Bureau 財經事務及庫務局 Tax Policy Unit 稅務政策組 Standing Advisory Committee 常務諮詢委員會

15. Recommendations on Fundamental Issues大原則上的建議 (1) Tax Policy Unit and Approach to Maintaining Competitiveness成立稅務政策組以維護競爭力 Three-pronged approach to improving competitiveness of HK’s tax system 利用三管齊下的措施 加強香港稅制競爭力 Providing greater certainty 增加明確性 Effecting better international integration 與國際接軌 Anticipating and responding to global trends 預測並回應全球趨勢 Twelve Detailed Recommendations 12 項個別議題的建議

16. Recommendations on Fundamental Issues大原則上的建議 (2) Competitiveness as the Underlying Principle to Fiscal Policy財政政策的基本原則 • A new value proposition for HK’s fiscal policy based on competitiveness as the key underlying principle, and striking a balance amongst the following principles:- 訂立一個新的價值觀，以競爭力作為政策的基本原則，並就以下三個元素作出平衡:- • Certainty • 明確性 • Efficiency and effectiveness • 效率與效益 • Low rate • 低稅率

17. Recommendations on Fundamental Issues大原則上的建議 (3) Retaining Comparative Advantages財政政策的基本原則 The following are generally regarded as comparative advantages which should be retained: 香港應保持它的相對優勢，包括： • limited number of taxes 稅種少 • source concept of taxation 地域來源徵稅原則 • tax exemption of profits from the sale of capital assets 出售資本性資產所得的利潤免稅 • tax exemption of dividend income 股息免稅 • low statutory tax rates 低法定稅率 • no tax on death transfers 沒有遺產稅

18. Recommendations on Fundamental Issues大原則上的建議 (4) Provide an Across-the-board Favourable Tax Environment　 提供一個可惠及各行各業的稅制環境 • HK should focus on providing an across-the-board favourable tax environment, rather than being distracted by calls for sector/industry specific tax incentives where the cost/benefit is unclear, and which could be perceived as inequitable. 香港應專注於提供一個可惠及各行各業的稅制環境，而不應考慮為特定行業提供稅務優惠。稅務優惠的成本效益並不清晰。同時亦有可能被視為偏袒或不公平，一但開始引進便會引來不同界別對稅務優惠的索求。

19. Recommendations on Fundamental Issues大原則上的建議 (5) Broadening the Tax Base　 擴濶稅基 • There is a general consensus that HK has a narrow tax base. 社會上已有共識認為香港的稅基非常狹窄 • Without an alternative new source of revenue, it will be difficult for HK to continue to reduce its direct tax rates in response to international competition, as any reduction will put pressure on HK’s budgetary position. 在沒有新的收入來源的情況下，香港仍然需要依靠直接稅收入去支持公共開支。因此，香港即使面對激烈的國際競爭，可調低直接稅的空間有限。 • As a community, HK must continue to study and debate options for broadening the tax base with the aim of reaching a consensus on the appropriate option. 香港應繼續研究和討論，以尋求一個得到各界認同而又可有效地擴濶稅基的方案。

20. Detailed Recommendations個別議題的建議

21. Detailed Recommendations Providing Greater Certainty

22. Page 20c 個別議題的建議 增加明確性

23. Page 21 Detailed Recommendations Effecting Better International Integration

24. Page 21c 個別議題的建議 與國際接軌

25. Page 22 Detailed Recommendations Anticipating and Responding to Global Trends

26. Page 22c 個別議題的建議 預測並回應全球趨勢

27. Page 23 Key Message主要信息 • Global financial crisis will likely result in more intense international tax competition 環球金融危機很大可能會令國際稅務競爭愈趨激烈 • HK’s tax policy should be aligned with its macro-economic goals and other government policy objectives 香港的稅務政策必須配合宏觀經濟目標及其他政策目標 • Tax policy review is an ongoing process 稅務政策必須不時檢討