International Monetary Fund demands tax reform from Hong Kong

Hong Kong economy is one of the most attractive among the international entrepreneurs. This is why the International Monetary Fund issued tax reform recommendations for this jurisdiction lately. For Hong Kong economy to stay competitive and flexible at the same time, it is vital to rework tax structure and change the approach.

Nowadays, Hong Kong government receives the most revenue from real estate tax and corporate tax. These figures are 28 and 30 percent respectively, which is relatively high compared to other jurisdictions. These taxes are hard to bear for some businesses because they are highly dependent on current incomes and business cycle.

Diversification of tax revenues is a very important part to keep a stable international economy. This means, every business, from small retails to giant corporations, will be able to function in this jurisdiction effectively and bring income to country’s budget.

The main recommendation of the IMF is to create new, progressive tax regime, which will include earlier rejected value-added tax, sales tax and other variations. This will let Hong Kong to remain an innovative offshore jurisdiction highly rated by the international businesses.