IMF recommends tax policy reforms for Hong Kong
30-Apr-2008The International Monetary Fund calls for Hong Kong's tax base to be broadened by introducing a goods and services tax, expanding the base of the salaries tax or exploring other options.
In its Staff Report released on 5 February 2008, the IMF reiterated its support for Hong Kong's commitment to the Linked Exchange Rate System (LERS) and the government's efforts to further Hong Kong as an international financial centre.
The IMF shared the government's view that the financial centre is intimately linked with Hong Kong's expanding role in Mainland financial intermediation. It recognised the authorities' efforts in seeking ways for Hong Kong's developed financial platform to benefit the Mainland, and the increased cross-boundary co-ordination with Mainland regulators.
To safeguard Hong Kong's first-mover advantage and diversify its business base, the IMF said that expanding the range and type of products to investors would also be important.
The IMF considered that ensuring continued financial stability would be essential to the competitiveness of Hong Kong's financial sector, and noted that the smooth implementation of Basel II, an enhanced framework of anti-money laundering and counter-terrorist financing, and the establishment of the Financial Reporting Council have further improved Hong Kong's governance and supervisory regimes.
Hong Kong Financial Secretary, John Tsang, said: "We are glad to note the IMF's positive assessment of the Hong Kong economy and the broad IMF's Public Information Notice support for the government's policy framework. We will continue our efforts in promoting deeper financial integration with the Mainland and diversifying our product and market mix to further enhance Hong Kong's status as an international financial centre."
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