Hong Kong Chief Executive Carrie Lam proposed a two-tier profits tax

Earlier this month Hong Kong Chief Executive Carrie Lam proposed a two-tier profits tax, saying it is a directive for enhancing economic development and this is likely to be effective in 2017/2018 financial year. The current profits tax rate for Hong Kong enterprises is 16.5%.

She announced that enterprises will enjoy a tax cut in her proposal. The rate for their first HK$2 million would be only 8.25 percent, even lower than the 10 percent Lam promised in her campaign manifesto.

Lam said: "It could cost a short-term drop in government revenue, but in the long-term it can strengthen Hong Kong's overall competitiveness and enhance the pluralization of the local economy, which can create extra government revenue and job opportunities and benefit people."