HK must focus on retaining talent, boost tax breaks

Melody Chen

Hong Kong needs to step up its game to attract and retain skilled workers and expand tax breaks for family offices to drive its growth, PWC Hong Kong says.

It must also build on its location within the Greater Bay Area to be a super connector between China and the world, it said.

PWC HK estimates Hong Kong will record a deficit of HK$94.8 billion for the 2023-24 fiscal year ending March, nearly double the government's original forecast of HK$48 billion, due to weak land sales and stamp duty revenue.

This is despite earning HK$95.8 billion from sales of government bonds, it said.

Financial Secretary Paul Chan Mo-po had earlier mentioned that the deficit is expected to be below HK$100 billion, emphasizing that the government will prioritize cutting expenditure.

Land sale revenue will be around HK$8 billion, 76 percent below the forecast of HK$33 billion, while stamp duty revenue is projected to be HK$58 billion, 18 percent lower than the initially estimated HK$71 billion, PwC said.

PWC HK warned that if government spending continues to rise at its current pace, a deficit is likely for the next four years, with the global economy expected to encounter increased uncertainties in 2025.

PwC South China tax leader Jeremy Ngai said Hong Kong must leverage its strategic location within the GBA and act as a super-connector between the mainland and the rest of the world, support innovative industries and retain talent "to drive the city's future growth."

PwC South Private Clients and Family Office tax leader Agnes Wong said the city should set up a one-stop service for visa applications and arrange suitable education facilities for children of international workers.

PWC HK also called for expediting the proposed enhancements to single family office tax concessions.

Expanding the classes of assets eligible for tax concessions to include fine arts and collectibles can address the needs of family offices, Agnes said.

"Given that the New Capital Investment Entrant Scheme and the family office tax concession share similar objectives of attracting asset owners to settle in the city ... aligning the qualifying investment lists under these two measures would ease investment decisions for family offices and individuals aspiring to settle in Hong Kong," she said.

melody.chen@singtaonewscorp.com