HONG KONG, CHINA - Media OutReach - 26 February 2020 - CPA Australia, one of the world's largest professional accounting bodies, has given its backing to HKSAR Government Financial Secretary Paul Chan's fourth Budget Speech, and described it as a comprehensive package of measures to counter the negative impacts of a multitude of challenges including the COVID-19 outbreak. CPA Australia would give a score of 85 out of 100 to this year's Budget.
"We welcome the Government's HK$10,000 cash payout scheme as a response to the economic downturn. This is an effective and timely measure to relieve people's economic burden. However, we consider a limited-life coupon scheme to be more effective as it will directly contribute to increasing local consumption and boosting the local economy," said Anthony Lau, President of CPA Australia Greater China 2020.
"Besides, we welcome the series of measures rolled out to help SMEs. Regarding the SME Financing Guarantee Scheme, CPA Australia recommends the Government to establish an 'SME Emergency Assistance Fund' to provide additional cash subsidies to SMEs of up to 10 per cent of the approved loan amount, subject to a ceiling of HK$200,000. This will further help SMEs manage through current economic challenges," Anthony said.
"At the same time, as SMEs applying for the SME Financing Guarantee Scheme may have to wait for the bank to approve for the loan, causing a time lag, and as the final approval is determined solely by the bank, SMEs may still face significant cash flow problems. Therefore, we recommend that the employer's contribution to the Mandatory Providence Fund (MPF) be covered by the Government for six months."
"We also recommend that SMEs and individuals be waived from the 2019-2020 provisional tax," Anthony added.
"For the final 2019-19 tax payment, if SMEs are experiencing cash flow problems, CPA Australia recommends that the Inland Revenue Department offer the option of deferring 12 months instalment without surcharge for SMEs. In the long run, we also suggest the Government to introduce tax loss carry back to support SMEs."
"In addition, we welcome the Government to attract more private equity funds to operate in Hong Kong by providing tax concession for carried interest issued by private equity funds operating in Hong Kong subject to certain conditions. To further support the financial industry, CPA Australia believes that details of this measure be published as early as possible, and that the Government should actively consult with stakeholders and professionals when developing and implementing these measures.
"Regarding the fiscal deficit and a deficit forecast in each of the coming five financial years, CPA Australia believes that as the Government still possess a fiscal reserve of HK$1.13 trillion, Hong Kong's financial situation remains sound and robust. The fiscal deficit for next year is expected to be HK$139.1 billion, however if the cash payout scheme and the other one-off relief measures are excluded, the fiscal deficit will be about HK$59 billion. This is equivalent to about two per cent of GDP, which is still below the internationally accepted level of a budget deficit of three per cent of GDP. Besides, as Hong Kong faces the challenges of an ageing population and changes in the global tax environment, CPA Australia recommends the Government to conduct a comprehensive tax reform review for the city's long-term development," Anthony said.
Authors: Media Outreach