Hong Kong Treasury Department: Build a competitive strategic tax system framework to consolidate Hong Kong's position as an international financial center.

On May 27th, Chen Haolian, Acting Director of the Financial Services and the Treasury Bureau of Hong Kong (Hong Kong Treasury Bureau), proposed in the Hong Kong Legislative Council to build a competitive strategic tax framework. Hong Kong has always been known for its simple, transparent, and low tax system. In the "World Competitiveness Report 2025" published by the International Management Development Institute, Hong Kong ranks first in the world in terms of "tax policies", showing international recognition of Hong Kong's tax system. Against the backdrop of reshaping the global economic landscape and evolving international tax rules, Hong Kong needs to consolidate its existing advantages and moderately revise tax measures to promote diversified economic development. Chen Haolian introduced that the Hong Kong government has always strategically utilized tax incentives to consolidate and enhance Hong Kong's position as an international financial, commercial, and logistics center. Currently, the government provides different tax incentives for multiple industries, including: (1) In the field of asset and wealth management, since 2019, the Hong Kong government has successively introduced three sets of tax incentives for funds, equity-linked instruments, and family investment control tools. To further enhance the attractiveness and competitiveness of the tax incentives, the government has proposed optimization measures, including including more asset categories, such as loans and private debt investments, digital assets, and precious metals such as gold, in the tax-exempt range. The Hong Kong government plans to submit relevant legislative proposals to the Legislative Council next month; (2) In addition to the above-mentioned tax incentives for funds and family investment control tools, which will cover the buying and selling of gold and other precious metals, further studies will be conducted to provide tax incentives to qualified institutions conducting gold trading and settlement in Hong Kong; (3) In the maritime industry, the Hong Kong government provides a half-tax exemption to marine insurance business. In addition to marine insurance, specific businesses of Hong Kong insurance companies and insurance brokers, as well as offshore and onshore risk insurance business of captive insurers, are eligible for half-tax exemption; (4) In the field of scientific research, the Hong Kong government provides additional tax deductions for qualifying research and development expenditures, where the total amount of qualified research and development expenses paid to designated local research institutions and enterprises can receive a 300% tax deduction for the first HK$2 million, and a 200% deduction for the remaining amount, without an upper limit. Chen Haolian said, "These examples demonstrate that the SAR government has always actively utilized tax incentives to create an ideal business environment for multiple industries and promote local economic development. We will continue to refer to industry opinions and optimize our tax system in response to actual situations." He continued to point out that last year's Policy Address proposed the formulation of an incentive policy package, through various policy tools such as land grant, land price, subsidy, and tax reduction, to attract high value-added industries and high-potential enterprises to settle in Hong Kong. In terms of tax reduction, the Hong Kong Treasury Bureau has formulated a preliminary framework and is working with multiple policy bureaus to finalize the details. Regarding corporate restructuring mechanism, the Hong Kong government has been committed to improving the corporate insolvency and restructuring system to safeguard the interests of company shareholders, creditors, and employees, and to consolidate Hong Kong's competitiveness as an international business and financial center. In fact, Hong Kong does not lack any corporate restructuring mechanism. The current market-driven agreement arrangement mechanism established under the Companies Ordinance (Chapter 622) is the main tool for corporate restructuring. This mechanism operates effectively under court supervision, is credible, and allows financially distressed companies to negotiate restructuring plans with creditors and members, helping companies avoid liquidation and achieve recovery goals. Over the past five years, there have been more than 40 schemes of arrangement approved by the court for debt restructuring, covering various industries such as aviation, mining, and real estate, reflecting the wide applicability of this mechanism in different industries and situations. Chen Haolian stated that he would continue to monitor the operation of the mechanism to assess the need for further improvements in the corporate restructuring mechanism in the future.