Mainland taxation policy concerns HK professionals

Source : China Daily

Taxation policy is a major concern for Hong Kong professionals who contemplate working on the Chinese mainland, a forum in the city heard on Dec. 21.

Professional people at the forum voiced concern that possible double taxation practices might discourage Hong Kong people from making the move. It might even curb the flow of talents in the Guangdong-Hong Kong-Macao Greater Bay Area.

The professionals proposed removing the double taxation practice; they suggested such alternatives as allowing Hong Kong people living on the mainland to pay individual income taxes based on rates set in Hong Kong - which are lower than the mainland.

"We hope that relevant government authorities look into these proposals and reduce the taxation burden on Hong Kong and Macao residents living on the Chinese mainland," said Peter Kung Wing-tak.

Kung is a member of the management committee of KPMG China and the senior partner of KPMG in Southern China.

Professionals in various sectors including finance, law, consultancy and IT made these suggestions at the forum. They also discussed opportunities and challenges for Hong Kong professionals in the Bay Area.

Their concerns focused on the country's new Individual Income Tax Law, which took effect on Jan 1. According to the new law, Hong Kong people who have resided in the mainland for 183 days or more in a year will have to pay income tax - including on income earned in Hong Kong and elsewhere.

In some pilot areas, there are already favorable policy arrangements to attract investment and talents. For example, in Qianhai, Shenzhen, eligible enterprises and individuals can enjoy a 15 percent preferential tax rate.

Wang Yanxia, deputy director general of the administration of Qianhai Bay port, revealed at the forum that existing tax benefits, which are to expire in 2020, are likely to be extended to 2035.

Tam Yiu-chung, a Hong Kong member of the country's top legislature - the National People's Congress - told China Daily in October that he had relayed such concerns to the central government.

Tam suggested a review of the new tax arrangements. He said he would seek to meet officials from the State Administration of Taxation to discuss the issue and clarify any uncertainties.

Despite challenges posed by the tax system, business environment and cultural barriers, Hong Kong professionals at the forum said they were still optimistic.

The Bay Area has a complete industrial chain absent in other bay areas in the world. This covers research, high-end manufacturing, finance, aviation and shipping, marketing and support facilities for trade, branding and design.

This advantage underscores the Bay Area's economic vitality and competitiveness, said Witman Hung Wai-man, principal liaison officer for Hong Kong, Shenzhen Qianhai Authority.

Ophthalmologist Chow Pak-chin said the opportunities brought about by the Bay Area vision only come once in a century. But he said more still needed to be done.

Chow, also president of Wisdom Hong Kong, a local think tank and forum organizer, urged the authorities to examine ways to facilitate synergetic development. This should be based on complementary advantages in the Bay Area's 11 cities. It would also avoid excessive competition for resources and talents, added Chow.

2019-01-08