"He Zhenyu: The Hong Kong government has formulated a preliminary framework for tax incentives, providing a half-tax or 5% preferential tax rate to attract high value-added industries."

On May 28, the Financial Secretary of Hong Kong, Paul Chan, stated at a legislative council meeting that the Hong Kong government has been promoting economic diversification through targeted and strategic tax measures. In the future, the government will continue to seek input from the business sector to optimize the tax system. A preliminary framework for tax incentives under the policy package has been developed, including offering a half-rate or 5% tax rate, aimed at attracting high value-added industries and high-potential enterprises. Regardless of whether a company is located in the Northern Metropolis or other parts of Hong Kong, they will have the opportunity to enjoy the preferential tax rates under the policy package. The tax incentives in the policy package involve multiple policy bureaus and require discussions with various sectors and departments to cover industries and enterprises, as well as specific requirements for different industries. The government will consult the legislative council later this year and submit revised regulations. When considering any tax incentives, the government must strike a balance between policy objectives and public finances. The Treasury will continue to practice prudent financial management when formulating tax measures. In addition, Paul Chan emphasized that the tax system is just one factor in promoting industrial and economic development. Apart from a competitive tax system, Hong Kong also benefits from its unique advantages as a gateway to China with a strong international business environment, which paves the way for investment promotion and economic development in Hong Kong. Furthermore, the Treasury will establish a Tax Policy Consultation Committee in mid-year, chaired by the Financial Secretary, to gather input from professionals in the business sector. This committee aims to assist the government in formulating tax policies that support economic development, including considering revisions to existing tax measures to attract more Shenzhen New Industries Biomedical Engineering and investments to Hong Kong. The government is currently preparing for the establishment of the committee and meetings will be announced in due course. Regarding corporate restructuring mechanisms, Paul Chan noted that there is an existing corporate restructuring mechanism in Hong Kong under the Companies Ordinance, which operates effectively under court supervision. The government has consulted on the establishment of a statutory corporate rescue procedure in the past. With the government's focus on economic development and China's strategy of greater opening up during the "14th Five-Year" period, Hong Kong enterprises will benefit from a better business environment, potentially reducing the need for corporate restructuring due to debts. Nevertheless, the government will continue to collect and evaluate stakeholder views on corporate rescue procedures or other restructuring systems to make the mechanism more efficient. In terms of financial market development, Paul Chan highlighted Hong Kong's renowned position as an international financial center. Hong Kong ranks third globally and first in the Asia-Pacific region in the latest Global Financial Centers Index. The performance of Hong Kong's new stock market is impressive, with IPO fundraising exceeding HK$280 billion last year, ranking at the forefront globally. Hong Kong also leads the world in arranging bond issuances for Asian institutions, with approximately one-quarter of the market share through Hong Kong arrangements last year. In asset and wealth management, Hong Kong is the largest hedge fund base in Asia and the second-largest center for private equity funds. In fundraising, especially in the securities market, the government will continue to coordinate efforts between the Securities and Futures Commission and the Hong Kong Exchanges and Clearing to further optimize securities market measures. This includes enhancing competitiveness in the listing mechanism review and improving market trading and settlement mechanisms to facilitate more issuers and investors to participate in financing activities and enhance market efficiency and infrastructure. As a global offshore RMB hub, the government will continue to enhance offshore RMB liquidity, diversify RMB products, improve Hong Kong's financial infrastructure, and actively explore emerging markets, in line with national efforts to promote RMB internationalization and increase capital account openness. Concurrently, the Treasury is accelerating the development of the international gold trading market in Hong Kong, fully building a central clearing system for gold, with the goal of piloting its operation within this year. Looking ahead, Paul Chan hopes to gain support from the Legislative Council in two areas. Firstly, in asset and wealth management, the government has proposed several optimization measures to enhance the attractiveness of existing funds, family investment control tools, and associated equity tax incentives, with legislative proposals to be submitted next month. Measures include expanding the definition of funds to cover retirement funds, donation funds, and specific single-investor funds, as well as adding eligible investment categories such as loans and private debt investments, digital assets, and precious metals. Expectations are that the proposed optimizations will attract more funds and family offices to establish and operate in Hong Kong, generating demand for related professional services, and the government hopes to receive continued support from council members. Secondly, in the short term, efforts will focus on further enhancing Hong Kong's role as a primary center for enterprise treasury functions. A working group led by the Treasury and the Inland Revenue Department has completed preliminary studies and will host an industry forum in June to bring together representatives from overseas and mainland companies to discuss trends in enterprise treasury functions and unveil action plans at the forum. This includes the addition of a pre-approval mechanism on top of existing relaxation measures, providing greater certainty and additional tax incentives and flexibility to pre-approved enterprise treasury centers and their associated entities. The government will also explore other measures, including enhancing promotion and communication efforts for multinational companies and improving professional training for relevant personnel. In conclusion, in addition to financing and asset management, the government aims to strengthen Hong Kong's position as an international risk management center. Proposed optimizations include reducing capital requirements for infrastructure investments and adjusting risk parameters for general insurance business, as outlined in supplementary legislation submitted to the Legislative Council. To align with the national "14th Five-Year Plan" and formulate a five-year plan, the Treasury has established two working groups to accelerate the compilation of financial affairs and treasury work, aligning with overall national development policies and strategies. The government will continue to closely monitor market conditions and continually enhance the efficiency of financial markets, infrastructure, regulatory systems, and implement appropriate tax measures to drive economic development and consolidate Hong Kong's position as an international financial center.