Professor K C Chan, Secretary for Financial Services and the Treasury, provided some interesting comments in his response to questions addressed to the Government.
On May 5, Professor Chan advised that revenue collections by the Inland Revenue Department from Salaries Tax and Profits Tax were estimated to be $179.1 billion, 6% less than for 2008-2009. The total amount of Salaries Tax paid by the top 10 salary taxpayers was estimated at $367 million, a decrease of $92 million as compared to the previous year. As for Profits Tax, the top 10 taxpayers paid $11.07 billion, which was $8.63 billion less than in 2008-2009. Interestingly, had the top 10 corporate taxpayers, who accounted for 6.2% of the direct tax collected in 2009-2010, maintained their 2008-2009 level of assessable profits, the fall in revenue would have been only around 1.5%. If my arithmetic is correct, the contribution by the top 10 corporate taxpayers for 2009-2010 is likely to fall from approximately 10% to 6.2% of the direct tax collected.
On May 12, Professor Chan responded to concerns that G20 members may impose sanctions on Hong Kong because the Government had not concluded agreements with 12 other countries for the exchange of tax information. He highlighted the considerable pace of development in this area, which started with the amendment to the Inland Revenue Ordinance that gave the Commissioner of Inland Revenue the authority to collect information not otherwise required for Hong Kong tax purposes. Furthermore, as of May 13, the Government had signed 10 CDTA’s, with the magical number of 12 in sight.
Professor Chan’s concluding comments were clear, and echo my own views: “Hong Kong has never been a tax haven. We will continue to expand our CDTA network with a view to enhancing Hong Kong’s position as an international financial and business centre.”
