The Australian Society of Accountants expects the Hong Kong government to have a fiscal deficit of HKD 900 million in the 2025/26 fiscal year

The Hong Kong government will publish the 2026 to 2027 fiscal year "Budget" on the 25th of this month. The CPA Australia today submitted forward-looking recommendations regarding the new budget, predicting a fiscal deficit of HKD 900 million for the 2025 to 2026 fiscal year, with the fiscal reserves expected to reach HKD 653 billion by the end of March this year, still at a robust level.

The CPA Australia, themed "Driving Growth in Hong Kong," proposed a series of policy measures centered around four pillars, including connecting China with global markets to drive growth, strengthening Hong Kong's position as a global trade and wealth hub, diversifying the economy and enhancing labor competitiveness, and improving living standards to build a healthier and more livable city.

The association emphasized that Hong Kong must consolidate its position as the primary gateway connecting China with global markets. With the national "14th Five-Year Plan" further emphasizing high-quality opening up, it believes that Hong Kong has advantages in assisting mainland enterprises to expand into overseas markets, while also attracting more high-quality foreign direct investment (FDI) into the mainland through its international platform. Liu Mingyang, co-chairman of the Greater China Taxation Committee, anticipates that establishing a tax incentive framework compatible with Corporate Treasury Centers (CTC) and Regional Headquarters (RHQ) will further enhance Hong Kong's attractiveness as an operational base for multinational enterprises.

He also pointed out that for mainland enterprises under the migration of company groups, given the current lack of clear guidelines to determine whether the migration of the parent company will trigger mainland tax liabilities and reporting obligations, he suggested that the government consult with mainland tax authorities to clarify that there is no actual asset transfer in the process, and thus no mainland tax should arise. Additionally, he recommended advancing financial market connectivity measures to provide special tax deductions for IPO-related expenses for newly listed stocks in Hong Kong