Hong Kong 5-year plan should have Northern Metropolis tax breaks, listing reforms: HKICPA

The Hong Kong Institute of Certified Public Accountants (HKICPA) has called for tax incentives to boost the Northern Metropolis's development and improve the stock exchange's listing regime. Stephen Law, president of HKICPA and a private-equity investor, explained that many start-ups require long-term investment that may lead to heavy losses before they can generate profits.

Law suggested that tax incentives should be structured to allow investors in these start-ups to offset other profits with their investment losses. The Northern Metropolis project aims to transform 30,000 hectares of land near the Chinese border into a technological and economic hub. The HKICPA also proposed lower tax rates for individuals working in the area.

Arthur Lee, HKICPA CEO and registrar, urged the government to negotiate with mainland Chinese authorities regarding a 20% tax on gains from cross-border trust and insurance policies purchased in Hong Kong. The tax should be imposed at the time of profit realization rather than when mainland investors purchase the policies. The HKICPA recommended stock listing reforms to streamline and expedite the approval process to attract more high-quality companies to list in Hong Kong.

The organization also suggested that Hong Kong Exchanges and Clearing reform the GEM board, a platform for start-ups, to help them raise funds for business development before qualifying for the main board. Additionally, the HKICPA emphasized the need to enhance Hong Kong's role as a platform for mainland enterprises to go global, with 96 local accounting firms already prepared to assist such firms in mergers and acquisitions or expansion plans in overseas markets.