Author Archives: hksar gov

     Following is a question by the Hon Jeffrey Lam and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (May 20):
 
Question:
 
     The Government proposed amendments to the Inland Revenue Ordinance (Cap. 112) at the end of 2017 to implement a two-tiered profits tax rates regime (the two-tiered regime), so that the profits tax rates applicable to the first $2 million of assessable profits for corporations and unincorporated businesses could be reduced by 50 per cent. The Government’s proposed legislative amendments aimed to reduce the tax burden on enterprises (especially small and medium enterprises and startups), foster a favourable business environment, drive economic growth, create job opportunities and enhance Hong Kong’s competitiveness. The Government projected at that time that the tax revenue would be reduced by about $5.8 billion per year as a result of the implementation of the two-tiered regime. The two-tiered regime has come into operation and is applicable to any year of assessment commencing on or after April 1, 2018. In this connection, will the Government inform this Council:
 
(1) of the amount of profits tax revenue forgone resulting from the implementation of the two-tiered regime and the percentage of such amount in the total tax revenue, in each of the past two financial years;
 
(2) whether it has assessed the effectiveness and the relevant data of the two-tiered regime, including a comparison of (i) the amounts of profits tax payable by companies of different sizes, (ii) the numbers of local and non-local enterprises and (iii) the scales of enterprises’ investments in Hong Kong, before and after the implementation of the two-tiered regime; and
 
(3) whether, since the implementation of the two-tiered regime, the Government has gained an understanding of the views and suggestions of various stakeholders in respect of the regime; whether it will conduct a review of the two-tiered regime in the light of the social changes, the successive implementation of a number of tax measures, as well as the recommendations and requirements put forth by the Organisation for Economic Co-operation and Development in respect of global taxation matters, in recent years?
 
Reply:
 
President,
 
     My reply to the various parts of the question is as follows:
 
     The Government amended the Inland Revenue Ordinance (Cap. 112) in early 2018 to implement the two-tiered profits tax rates regime (the two-tiered regime), under which the profits tax rates for the first $2 million assessable profits of corporations and unincorporated businesses are lowered to 8.25 per cent and 7.5 per cent respectively while the remaining profits will continue to be subject to the respective rates of 16.5 per cent and 15 per cent. The two-tiered regime has been implemented from the year of assessment (YA) 2018/19.
 
     The impact of the two-tiered regime on government revenue was first reflected in the financial year of 2019-20. According to the information of the Inland Revenue Department, the profits tax revenue for YA 2018/19 was about $156 billion. Amongst some 146 000 profits tax payers, around 89 000 had their tax assessed at the two-tiered tax rates, accounting for about 61 per cent of the total. The Government’s profits tax revenue forgone arising from the two-tiered regime in the financial year of 2019-20 amounted to about $6 billion, or around 4 per cent of the total profits tax revenue. This is comparable to our earlier estimation of the profits tax revenue forgone arising from the implementation of the two-tiered regime.
 
     Before the implementation of the two-tiered regime, we briefed professional bodies and chambers of commerce on the new initiative. The business sector generally welcomed the initiative and considered that it could help reduce the tax burden on enterprises and foster a favourable business environment. As the two-tiered regime has just been implemented for two years and the profits tax assessment for YA 2019/20 is still underway, we will continue to closely monitor its implementation and currently have no plan to review it. read more

     Following is a question by Professor the Hon Joseph Lee and a written reply by the Secretary for Food and Health, Professor Sophia Chan, in the Legislative Council today (May 20): Question:      At present,… read more

     Hongkong Post will launch a special stamp issue with the theme “Hong Kong Museums Collection – Selection from the Chih Lo Lou Collection” tomorrow (May 21). A set of six stamps and a stamp sheetlet jointly present five art pieces by masters of painting and calligraphy including Splashed-colour Landscape by Zhang Daqian, Peach Blossom Retreat by Tang Yin, Landscapes Depicting Poems of Huang Yanlü by Shitao, Gathering Fungus by Lu Zhi and Paintings on Miscellaneous Subjects by Chen Zi. All are art treasures with their own uniqueness.
      
     The Chih Lo Lou Collection of Chinese Painting and Calligraphy is a private collection established by the philanthropist and collector Mr Ho Iu-kwong. The Ho family donated the collection to the Hong Kong Museum of Art after Mr Ho passed away. Comprising precious paintings and calligraphy pieces that span from the Song Dynasty to modern times, the collection is particularly strong in works by various schools of the Ming and Qing dynasties, which chronicle the aesthetics of different periods and regions. These works enjoy high acclaim from heritage and arts sectors.
      
     The art pieces adopted for the stamp products’ design are precious gems unique to Chinese painting that have gone through ages and been celebrated with time. The three stamps together make a collage of Peach Blossom Retreat by Tang Yin, featuring an elegant and exquisite style. In this masterwork of his, a mountain retreat is shrouded in mist above a valley surrounded by waterfalls. A scholar is depicted in the middle of the scroll sitting on a stone platform contemplating the beautiful landscape. The contented and relaxed expression of the scholar projects his desire to escape from worldly chaos into the spiritual landscape.
      
     The stamp sheetlet portrays Splashed-colour Landscape painted by Zhang Daqian in 1966, in celebration of Mr Ho Iu-kwong’s 60th birthday. Zhang was living in Brazil by then and this piece of work signifies his sophisticated style of mastering the splash technique in his later years. The painting showcases his mastery of splashed colours with turquoise and ink that takes the art form to new heights. Printed with special stamp paper, it makes the stamp sheetlet exceptionally precious. Savouring the close detail of these works on the theme of natural vistas enables one to escape from the hustle and bustle and revel in the beauty of nature. To learn more about Chih Lo Lou and these five masterpieces, click here and to listen to Curator (Chih Lo Lou), Hong Kong Museum of Art, Mr Sunny Tang, who will share the stories behind the man and his art.
      
     Starting from tomorrow, this set of special stamps and associated philatelic products including a set of six stamps, a stamp sheetlet, an official first day cover, a presentation pack, a set of postage prepaid picture cards and a serviced first day cover will be placed on sale at post offices.
      
     For the issue of the “Hong Kong Museums Collection – Selection from the Chih Lo Lou Collection” special stamps tomorrow, Hongkong Post will implement a special sales arrangement to achieve social distancing and prevent crowds. During the period from today to the issue date of the stamps (May 21), customers could place their orders for this set of special stamps and associated philatelic products on the website stamps.hongkongpost.hk, including a set of serviced first day covers with special stamps date-stamped with pictorial postmarks of all 38 philatelic offices, without the need to visit the actual outlets. In addition, collection points will be set up at all post offices on the issue date of the special stamps to facilitate the submission of order forms as well as first day covers requesting hand-back date-stamping service. Hongkong Post will notify these customers of the collection date of their orders separately.
      
     Information about this special stamp issue is available on the Hongkong Post website at www.hongkongpost.hk or the Hongkong Post mobile app.

            

     Following is a question by the Hon Starry Lee and a written reply by the Secretary for Labour and Welfare, Dr Law Chi-kwong, in the Legislative Council today (May 20):

Question:

     Hong Kong’s economy and people’s livelihood are badly hit by the Coronavirus Disease 2019. As revealed by the findings of a survey conducted in April this year by the Democratic Alliance for the Betterment and Progress of Hong Kong, 64.9 per cent of the respondents indicated that their income had dropped due to the epidemic, and 67.5 per cent of the respondents were worried that they or their family members would lose their jobs. Although the Government has earlier launched two rounds of relief measures under the Anti-epidemic Fund (AEF), some operators and practitioners in a number of trades still indicate that they have not benefited from the measures. In this connection, will the Government inform this Council:

(1) given that the unemployment support scheme implemented under the Comprehensive Social Security Assistance framework has been criticised for its stringent eligibility requirements and complicated application procedure, whether the Government will relax the eligibility requirements so that applicants are required only to produce proof of unemployment but not to pass the assets tests; if so, of the details; if not, the reasons for that;

(2) whether it will launch a new round of relief measures expeditiously to disburse subsidies to employees aged above 65, long-term casual workers as well as self-employed persons who have not made any Mandatory Provident Fund contributions; if so, of the details; if not, the reasons for that;

(3) whether it will provide tax concessions to landlords of retail shops who have granted rent cuts to their tenants, so as to encourage landlords to cut rents; if so, of the details; if not, the reasons for that; and

(4) whether it will set up a dedicated website for AEF to enhance the arrangements for disseminating information, and step up the relevant publicity work; if so, of the details; if not, the reasons for that?

Reply:
 
President,

     Having consulted the relevant policy bureaux and departments, my consolidated response to the Member‘s question is set out below:

(1) There are currently no mechanisms/ systems in place to disburse unemployment assistance fund promptly in Hong Kong. These mechanisms/ systems include: (1) a pay-as-you-go income tax system;  (2) a contributory social insurance system; or (3) a central provident fund system. It will take time if we were to establish such mechanisms/ systems, and imminent needs cannot be relieved expeditiously. As an expedient measure, the Government will launch a time-limited unemployment support scheme (from June 1 to November 30, 2020 for a period of six months) through the Comprehensive Social Security Assistance system. The asset limits for able-bodied applicants will be temporarily increased by 100 per cent and the value of an owner-occupied residential property of able-bodied households will be disregarded according to the established arrangement with a view to providing immediate financial assistance for those unemployed who are most in need. In addition, employees are qualified for severance payment or long service payment if they satisfy the conditions stipulated in the Employment Ordinance. Meanwhile, under the “Love Upgrading Special Scheme” of the Employees Retraining Board, the existing maximum amount of monthly allowance during the training period is $4,000 per eligible trainee (who are unemployed or underemployed).  The amount is expected to be increased to $5,800 with effect from May 25, 2020 subject to the completion of the legislative amendment.

(2) The Government announced on May 12 adjustments to the Employment Support Scheme (ESS), including the extension of coverage of ESS to around 60 000 employees aged 65 or above whose employers have made voluntary contributions for them under the Mandatory Provident Fund (MPF) Schemes. Employers may apply for wage subsidies for these employees with a view to encouraging employers to retain mature employees.

     Apart from the 60 000 employees aged 65 or above covered by the ESS, together with around 40 000 employees aged 65 or above under the various sector schemes covering land transportation (i.e. taxi, red minibuses, green minibuses and local ferries), laundry, catering and construction sectors which have been, or will be launched under the two rounds of Anti-epidemic Fund, as well as around 10 000 employees aged 65 or above employed by government outsourced contracts whose wages are not affected by the epidemic, the various measures as referred above will altogether cover more than 110 000 employees aged 65 or above.

(3) To relieve the impact of the COVID-19 epidemic on various sectors, the Government has reduced rental for eligible businesses or organisations renting government premises. The rental reduction for eligible tenants has been increased from 50 per cent to 75 per cent for the period between April and September this year, with its scope also expanded to cover more businesses or organisations. Tenants who are required to cease operation due to the Government’s implementation of anti-epidemic measures will receive full rental waiver during the closure period. The Government urges public bodies to follow suit and appeals to landlords in the private sector to reduce rental and ride out the difficult times with their tenants.

     According to the latest rental indices compiled by the Rating and Valuation Department, private retail rents decreased by about 7 per cent in March 2020 over a year earlier, indicating a downtrend in the market rentals. Under the circumstances, it would be undesirable to offer tax concessions with public money as an incentive for landlords to reduce rents. Besides, tax concessions will have to be effected through amendments to the Inland Revenue Ordinance and hence could not alleviate the rental pressure of businesses in the near term.
 
(4) The Government revamped the anti-epidemic thematic page in the Centre for Health Protection’s website in February to strengthen dissemination of information. The revamped website “COVID-19 Thematic Website” (www.coronavirus.gov.hk) integrates information from related government bureaux and departments, and serves as a one-stop platform for broadcasting the latest updates on COVID-19 as well as public health education information, figures relating to the epidemic, measures by bureaux and departments, and clarifications, etc.

     A webpage of the Anti-epidemic Fund has been added under the “Important” session of the website to list in details the related government bureaux and departments/organisations responsible for implementing the measures. The booklet on “Series of measures to support individuals and businesses affected by the novel coronavirus epidemic” has also been uploaded to the webpage for easy reference by members of the public. The webpage is updated from time to time with the uploading of related press releases and information of the implementing departments/ organisations.

     The website of the Employment Support Scheme (www.ess.gov.hk) was launched on May 19, providing detailed information about the Scheme.

     The Government will continue to disseminate information of the Fund through press releases, online platforms and social media. read more

     In response to some comments saying that further relaxation of restrictions on group gatherings under the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap. 599G) (the Regulation) involves political consideration, the Government’s spokesperson pointed out last night (May 19) that these allegations were totally unfounded.

     The Government has introduced statutory restrictions on group gatherings in public places with a view to reducing risks of virus transmission. No political considerations have ever come into play. The Government has all along adopted a “suppress and lift” strategy and made adjustments to measures to control the epidemic as appropriate while striking a suitable balance among public health, economic development and day-to-day operation of the society. Even though the situation in Hong Kong has become more stabilised in terms of the number of confirmed cases of COVID-19 in the recent weeks, taking into account the local cluster cases last week without known sources, the impending school resumption, and concerns of the community and experts about whether the cluster cases would cause large-scale outbreak in the community, we are of the view that the current social distancing measures should generally be maintained for 14 days, including the restrictions on group gatherings, and will conduct further review having regard to the development of the epidemic situation.

     According to provisions of the Regulation, the Government may exempt specific group gatherings. Exempted group gatherings are in general necessary for daily lives or are essential for maintaining the operation of the society. Taking into account the need for worshippers to participate in religious activities raised by religious groups, we consider that the restrictions on religious gatherings could be relaxed subject to fulfilment of appropriate infection control requirements. However, these gatherings are limited to those held at premises regularly used as a place of worship, rather than a full relaxation.

     As for other various types of group gatherings at public places, the Government is of the view that the conditions are not present for us to allow full relaxation. That said, the Government will review relevant implemented measures from time to time having regard to the development of the epidemic situation. On one hand some social distancing measures will be maintained, on the other there will be room for gradual resumption of social activities, with suitable adjustments made to social distancing measures after considering all relevant factors. The Government does not rule out gradual relaxation of restrictions on group gatherings subject to the epidemic situation, for example, by adjusting the maximum number of persons allowed at a group gathering or introducing additional categories of exempted group gatherings.

     Before the global epidemic is fully under control, the Government appeals to the public to stay vigilant, maintain an appropriate social distance from others as far as possible, and adopt necessary precautionary measures in crowded places, in order to cut the virus transmission chain. read more