Deloitte: Hong Kong's deficit in the 2024/25 fiscal year may exceed HK$100 billion.

According to the Deloitte Hong Kong Budget Group, it is estimated that the deficit in Hong Kong for the fiscal year 2024/25 may exceed HKD 100 billion. The fiscal reserves are expected to decrease to around HKD 600 billion by March 31 next year, compared to HKD 734.6 billion as of March 31 this year, a decrease of approximately 18.32%. Deloitte has three expectations for the budget, including enhancing Hong Kong's competitiveness from a tax policy perspective; maintaining Hong Kong's status as an international financial center and asset management center; and creating a more attractive business environment for the digital economy. Deloitte suggests, firstly, introducing new tax incentives for international traders, such as introducing new tax incentives for international commodity traders at a preferential tax rate of 8.25%, or half of the standard tax rate, and optimizing the tax incentives for ship leasing, allowing ship lessors to deduct expenses incurred from acquiring ships, among others. They also recommend expanding tax deductions for research and development and intellectual property, allowing deductions for outsourcing costs related to R&D activities in the Greater Bay Area. Secondly, Deloitte recommends continuously upgrading tax incentives for single family offices and funds, expanding the list of eligible assets to include digital assets, art pieces, overseas properties, and even Hong Kong properties valued at over HKD 50 million (as suggested in the Policy Address). They also propose extending the stamp duty exemption policy for securities dealers to other listed structured products. Lastly, they suggest providing tax incentives for companies in the digital industry by defining digital trade and cross-border e-commerce logistics industries, offering a preferential tax rate of 8.25% to eligible businesses in these industries, compared to the statutory rate of 16.5%. Companies developing or upgrading qualified digital platforms can enjoy a 200% deduction, doubling the current tax deduction rate.