The policy would put Hong Kong at par with major financial centres like Singapore and US.
To keep its tax regime competitive in the international economic arena, Hong Kong must introduce a group tax loss relief that would serve to encourage entrepreneurial risk-taking and promote innovation and technology development activities, according to KPMG 2018-19 Hong Kong Budget Review.
A group tax loss relief would allow for a tax loss transfer amongst wholly owned group companies.
However, no such mechanism exists in Hong Kong as KPMG notes that 3 in 5 (62%) of surveyed business executives are not confident that Hong Kong’s tax system can remain competitive in the future.
“US’s tax reform initiatives were swiftly enacted despite massive controversy. Contrastingly, HKSAR has been slow in introducing measures to increase the competitiveness of Hong Kong’s tax system, leading to a more pessimistic view regarding the future competitiveness of the Hong Kong’s tax system in the business community,” the report noted.
The move would then put Hong Kong at par with major financial centres like Germany, Japan, Singapore, UK and US.
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