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2	GST is on its way – 3 questions When will it happen? How much will it be? Will there be any exemptions?
3	How safe is the government forecast for 2008/09?
4	Timing of GST in Hong Kong
5	GST rates in Asia Pacific
6	Rate increase
7	Registration threshold – IMF report
8	Basic essentials - Food
9	Basic essentials - Food Definition of food which qualifies for zero-rating Food is taxable in New Zealand and Singapore Wealth distribution
10	Basic essentials - Health and education Large proportion of government’s expenditure Adding GST to these services may drive people towards public sector and increase the cost of government Typically small percentage of total household expenditure – effect of GST insignificant
11	Financial services Probably one of the most difficult issues under GST Services with explicit fees can be taxed just like other goods and services Problem is the value of a financial service is usually embedded in the interest rate spreads and can’t be identified for each transaction
12	Financial services
13	Financial services
14	IMF suggested two solutions Follow Singapore practice – Explicit fees are taxed, others are exempt, fixed percentage of input tax recovery based on type of institution Full input tax recovery – explicit fees are taxed, others are zero - rated
15	Fixed input tax recovery rates for banks and finance companies in Singapore
16	Property Residential properties
17	Property Commercial properties
18	Real Estate Possible GST treatment
19	Exports Destination-based GST – exports are free of GST and imports are taxed Challenge? Revamp to customs controls Re-export Identification of export of service
20	Tourism GST refund scheme for visitors Proper procedures are required – inspection of goods; arrangement of collection of goods Challenge? what about the high volume of traffic with the Mainland
21	Other sectors Charities Transport Water Utilities Books Newspapers
22	Indirect taxes
23	Possible tax offsets Reduction in Profits Tax rate Changes to Profits Tax system, e.g. group relief Reduction in Salaries Tax rate Increase in personal allowances Abolition of Estate Duty Reduction in Stamp Duty rates
24	Targeted compensations Adjusting CSSA payments Reducing public housing rental charges Reducing general rates Salaries Tax credit to lower-income groups Increase in personal allowances Cash payments Combinations of the above
25	Take home messages GST introduction is a key agenda item for the Government – it will happen in some shape or form Possible time – March 2008? Possible rate – 5%? Registration threshold - $5 million annual turnover? Key policy and design issues still very much open to debate Industry – specific issues present opportunities / threats Business should start planning for GST
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