Policy Statement & Submission


HKGCC Budget Proposals for 2024-2025

19 January 2024

The Honourable Paul Chan Mo-po, GBM, GBS, MH, JP
Financial Secretary
Hong Kong Special Administrative Region
25/F, Central Government Offices
2 Tim Mei Avenue, Tamar
Hong Kong

Dear Financial Secretary,

I am pleased to submit for your consideration the Hong Kong General Chamber of Commerce’s proposals for the Government’s forthcoming Budget. 

In the midst of Hong Kong’s ongoing recovery, the economy continues to face significant challenges and uncertainties. However, as Hong Kong has proven repeatedly, we possess many unique advantages, not least our unmatched access to the world’s second largest economy, and our role as a hub in the heart of the dynamic Asia-Pacific economy. 

No doubt we will need to face more obstacles going forward, but with Hong Kong’s collective wisdom and expertise, we believe they are not unsurmountable. As 2024 unfolds, we are mindful that the pandemic has depleted our fiscal war chest, so prudent management of public finances may present some constraints over the short term. 

However, it is equally important to address the economic pressures faced by Hong Kong businesses and society as a whole. Our attached submission sets out our recommendations on strategies that the Government can consider in order to chart a course forward during these challenging times.

We hope you will find our suggestions useful in formulating the forthcoming Budget.

Yours sincerely,

Betty Yuen


HKGCC Submission to the 2024-25 Budget
Executive Summary

1    Short-Term Relief

External factors such as high interest rates continue to buffet Hong Kong’s economy. Given the challenging economic environment, we call on the Government to provide one-off rebate on profits tax, salaries tax and tax under personal assessment by 100%, subject to a ceiling of HK$6,000 for each case. 

We call on the Government to extend the time-limited special concessionary measures of the SME Financing Guarantee Scheme for a further 24 months. 

We strongly recommend the immediate and complete removal of the existing property cooling measures, which include the Special and Double Stamp Duties.

2    Retaining and Attracting Talent and Business

    Results-Oriented Bureaucracy

To enhance Hong Kong’s overall operating environment, there is a pressing need for a systemic and predictable approach to address policy and administrative inefficiencies. We call on the Government to implement a regulatory impact assessment framework to assess new policies and review existing regulations, ensuring their relevance and effectiveness.


Businesses in Hong Kong are grappling with acute manpower shortages, due to such factors as an outflow of local talent and an ageing population. To ensure a sustainable supply of skilled labour in Hong Kong, our recommendations range from introducing a tax deduction for expenses incurred in hiring domestic helpers and caretakers, providing adequate and affordable childcare services for young families, to supporting employers for upskilling their workforce. 

    Regional Headquarters (“RHQs”)

To attract enterprises from outside of Hong Kong to set up headquarters and/or corporate divisions in Hong Kong, we call on the Government to provide finite concessions such as a 3-year tax holiday and preferential tax rates to RHQs. 

We recommend that the Government to engage with its Mainland counterparts on eliminating withholding tax on dividends paid by Mainland businesses to Hong Kong investors by way of an administrative concession. As a starting point, we recommend launching a pilot scheme in the Greater Bay Area (“GBA”).

    Creating the Ecosystem for Ultra-High-Net-Worth Families and Single Family Office (“SFO”)

To enhance Hong Kong’s competitiveness in the global private wealth market, we call on the Government to grant a waiver regarding the 5% cap on incidental transactions and expand the scope of qualifying assets for SFOs to enjoy profits tax concession. We also urge the Government to provide further clarity on the process for the Capital Investment Entrant Scheme.

    Company Re-domiciliation

To elevate Hong Kong as the preferred base for multinational corporations facilitate companies based overseas for re-domiciliation to Hong Kong, we call on the Government to provide greater flexibility and tax certainty for companies seeking to change their domicile to Hong Kong. We recommend that the IRD issues comprehensive guidance to specifically address transitional tax matters.

    R&D and Innovation

The requirement to conduct R&D activities locally in Hong Kong in order to qualify for an enhanced tax deduction poses considerable challenges due to the chronic lack of talent and facilities locally compared to other GBA cities such as Shenzhen. We call on the Government to relax the policy on granting super deduction to also include R&D activities carried out in the GBA.

3    Financial Markets

    Green and Sustainable Finance

Considering the current higher interest rates and the consequent increase in financing costs, we call on the Government to issue bonds in different tranches periodically to mitigate interest rate risks. Consideration should be given to the issuance of green bonds, to support environmentally friendly projects that align with the Government's commitment to sustainable development and addressing climate change.

To promote the development of green and sustainable finance in Hong Kong, private sector participation, especially from SMEs, in sustainable investments is important. We call on the Government to incentivize banks and other financial institutions to develop green finance products and services, to support sustainable projects across various industries, as well as provide related financial and administrative assistance to SMEs in green financing.

    RMB Internationalization

Existing Connect Schemes could be further harnessed to further enhance the internationalization of the RMB across global markets. We also call on the Government to engage with the Mainland authorities to broaden the range of eligible listed stocks under the HKD-RMB Dual Counter Model, thereby facilitating the trading of Hong Kong stocks denominated in RMB.

    Virtual Asset

To further enhance the usage of RMB for international trade finance, we suggest that consideration be given to allowing the issuance of RMB stablecoins or stablecoins backed by a basket of different currencies, including RMB, in addition to HKD or USD stablecoins. We also call on the Government to explore the establishment of a Virtual Asset Connect Scheme, with a daily limit of approximately HK$20 billion initially.

    Attracting Financial Investors

To enhance the diversity of institutional investors in Hong Kong, ranging from hedge funds and pension funds to sovereign wealth funds, it is recommended that the tangible benefits of establishing a presence in Hong Kong be clearly articulated. Additionally, the Government can play a valuable role by facilitating dialogue with Middle East sovereign wealth funds that express interest in investing in the Mainland.

4    Taxing Non-Hong Kong Resident Digital Service Suppliers

To swiftly alleviate Hong Kong’s serious financial pressures, the Government could impose a digital services tax ranging from 3% to 5% on digital services provided by foreign service providers, effective from the second half of 2024. This tax would apply to services such as online advertising, e-marketplaces, social media platforms, streaming and sharing of content, search engines, and user data intermediation. 

5    Global Minimum Tax

We recommend that the Government design the domestic minimum top-up tax in a way that satisfies the requirements of functional equivalence to the OECD’s Global Anti-Base Erosion Model Rules while satisfying the Consistency Standard set out therein to qualify for Qualified Domestic Minimum Top-Up Tax Safe Harbour. Given the global trend of delayed implementation of the Undertaxed Payments Rule, we suggest that the Government adopt a "wait-and-see" approach, to better determine an appropriate timeline for implementing UTPR in Hong Kong.

6    Tax System

The global tax landscape has been evolving at an unprecedented pace. We call on the Government to (1) rapidly undertake the requisite digital transformation of the tax administration process, (2) set a specific goal on the number of additional treaties to be negotiated over a defined period, and (3) enhance clarity and promote efficiency for the oversight of non-tax grants and incentives.

7    Regional Intellectual Property (“IP”) Trading Centre

To enhance Hong Kong’s role as a regional IP trading centre, we suggest that the Government widen the scope of eligible IP assets, and permit claims by affiliates of IP owners to qualify for profits tax deductions, as this would encourage IP owners with overseas IP rights to register in Hong Kong.

8    International Trade Centre

To enhance the appeal of establishing a trading base in Hong Kong, we suggest that international traders be incentivized with a reduced tax rate of either 5% or 10%, depending on the nature of the qualifying trading income. Such a measure would be highly attractive for international traders that are seeking to establish a trading base in Hong Kong.

9    Retirement Protection

In the face of an ageing population, we call on the Government to provide tax incentives to boost retirement savings. Consideration should be given to setting the individual tax deduction caps at HK$60,000 for tax deductible MPF voluntary contributions and qualifying deferred annuity policies premiums. 

We also call on the Government to broaden the range of investment vehicles currently on offer. Consideration should be given to allowing partial withdrawal of MPF contributions for major life events, such as making a property purchase deposit by first time homeowners.


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