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In 1992, KPMG became the first international accounting network to be granted a joint venture licence in the Chinese Mainland. KPMG was also the first among the Big Four in the Chinese Mainland to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multidisciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.
KPMG welcomes Hong Kong Policy Address for creating new impetus for consolidating the city’s international financial centre status
21 October, 2024, Hong Kong (SAR), China ("Hong Kong") - KPMG welcomes the recent measures announced in the 2024 Hong Kong Policy Address, which aim to create new momentum for economic development and consolidate the city’s status as an international financial centre. These initiatives represent a significant step forward in deepening policy reforms and exploring new growth opportunities within the city.
Ivy Cheung, Regional Senior Partner in Hong Kong SAR, KPMG, believes that:
The Policy Address has set a clear direction and plan for Hong Kong's future position, aiming to establish the city as the “three centres and one hub”—an international financial, shipping, and trade centre, as well as a hub for high-end international talent. Additionally, the bold decision to adjust the Capital Investment Entrant Scheme to include residential property is welcomed. It is also encouraging that the government has accepted the industry's suggestion to expand the scope of allowable investments under the family office regime, and she suggests that the government consider including artworks and virtual assets to align with family offices' investment strategies.
As announced in the 2024 Policy Address, applicants under the New Capital Investment Entrant Scheme are allowed to invest in residential properties, provided that the transaction price of a single property is HKD 50 million or above. Ivy Cheung states, “This is a well-thought-out move, as it specifically targets properties over HKD 50 million while only counting HKD 10 million towards the total HKD 30 million investment requirement. This means that applicants must invest in other assets in addition to the property. More importantly, the inclusion of HKD 50 million worth of residential property will not be seen as affecting the supply and prices for the general public.”
In regard to promoting the development a headquarters economy, Ivy Cheung suggests that the government could provide further tax incentives and exemptions to attract global companies to establish regional headquarters in Hong Kong, such as adopting 50% of the normal tax rate (i.e. 8.25%) for profits derived from regional headquarters in the city.
In terms of trading, the government announced a reduction in the liquor duty from 100%. Ivy Cheung believes that this approach was adopted in response to public concerns. Adjusting the rate for a select portion, instead of using a broad-brush approach, has partly addressed some of the concerns about encouraging alcohol consumption and potential addiction. It is suggested that the government continue to provide proper education and support to balance these concerns. She added, “We also welcome the suggestion to make Hong Kong a commodity trading center through the use of tax incentives and we suggest that the government set clear guidance on how to qualify in order to be more targeted.”
As for the shipping sector, several incentives have been introduced in the past to support ship leasing activities, ship agency, and ship management. Given the evolving international taxation landscape, Ivy Cheung supports the Chief Executive's suggestion to review these incentives, which will help ensure that Hong Kong remains competitive. For instance, the government could draw inspiration from the successful enhancement of the aircraft leasing incentive and seek to apply similar principles to the ship leasing regime.
In response to young people's aspirations for their own living space, policies that assist them in purchasing subsidized sale flats by allocating additional ballots are welcomed. Furthermore, the adjustment of the maximum loan-to-value ratio to 70% and the maximum debt servicing ratio to 50% comes at an opportune time, following the US Federal Reserve's decision to lower interest rates by 50 basis points. The property market, particularly for first-hand flats, is showing positive signs. Moving forward, the government could explore additional tools, such as providing stamp duty exemptions or reductions for first-time local buyers.
In addition, Ivy Cheung believes the support for women and working parents can be enhanced through the introduction of a mentorship program and an increase in daycare subsidies. Additionally, we suggest that the government consider providing incentives, such as tax allowances, for working parents who hire domestic helpers—an arrangement that is quite common in Hong Kong—as well as for grandparents who assist in caring for their grandchildren. These measures could not only facilitate women's return to the workforce but also potentially increase the birth rate, addressing the challenges posed by the current aging population.
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