Budget Speech

International Tax Co-operation

179. The Organisation for Economic Co-operation and Development (OECD) is drawing up new proposals to address base erosion and profit shifting (BEPS 2.0), which include the introduction of a global minimum tax rate and a digital tax.  In mid-2020, the Advisory Panel on BEPS 2.0 commenced work on assessing the impact of the proposals on Hong Kong.  At the same time, the Government has been collecting views from stakeholders in the business sector.  Taking into account the preliminary views of the Advisory Panel, I would like to outline the direction of the Government's response measures so that the business sector can have a better grasp of the issue and make early preparation.  First, as an international financial and business centre, Hong Kong will actively implement the BEPS 2.0 proposals according to international consensus.  Second, as most of the rules under BEPS 2.0 are only applicable to large multinational corporations, we will minimise the impact on local SMEs where possible when drawing up the response measures and strive to maintain the simplicity, certainty and fairness of our tax regime, which are our key advantages.  Third, while safeguarding Hong Kong's taxing rights, we will at the same time minimise the compliance burden on affected corporations.  Fourth, we will keep up our efforts in improving Hong Kong's business environment and enhancing our competitiveness, with a view to attracting multinational corporations to invest and operate in Hong Kong.  Once the OECD has finalised the proposal, the Advisory Panel will put forth its recommendations on the specific response measures in its report to me.