Paul Chan warns of tax concession predicament

Finance | Bloomberg and Victor Zhong 8 Jun 2021

The proposed changes to the global tax regime may affect some of the tax concessions the Hong Kong government offers to various industries, says Financial Secretary Paul Chan Mo-po.

Speaking in the Legislative Council yesterday, Chan addressed the agreement by the Group of Seven finance ministers at the weekend for a minimum corporate tax rate of at least 15 percent for multinationals and upcoming broader talks.

"We would like to use low tax rates to promote development for certain sectors so we may be restrained by using a low tax rate regime as a competitive method," Chan said in response to a lawmaker's question.

Separately, although the city has witnessed a close-to-zero underlying inflation rate in the first four months, the market should keep an eye on exchange rate fluctuation and the global inflation, especially the US figure, government economist Andrew Au Sik-hung, said in a council meeting.

This came after the US reported more than 4 percent inflation in April, which was relatively high, and the yuan rose against the US dollar, driving the local import prices up by 1 percent year-on-year, said Au. Au added that the currency has little impact on inflation.

In other news, the Hong Kong Monetary Authority announced that the official foreign currency reserve assets of Hong Kong amounted to US$494.5 billion (HK$3.86 trillion) at the end of May, compared to US$490.6 billion at the end of April.

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