Among other things, the 2020 Policy Address seeks to consolidate and enhance Hong Kong’s strengths and diversify its economic development. Its section on “New Impetus to the Economy” lays down the overall strategy that guides the economic development of Hong Kong. In particular, ‘the current-term Government emphasises leveraging our unique advantages under “One Country, Two Systems”, integrating proactively into national development, striving to resolve the two major bottlenecks of land and talents, and investing substantially in I&T industries’.
In the document, the I&T industry has been identified as being one of the few key industries for growth and development. We set out below highlights on how the government intends to develop Hong Kong into an I&T hub:
Current Position of I&T
Over the last few years, the development of Hong Kong’s position of I&T has been made possible by the government’s ‘high-level steer, cross-departmental collaboration, and investments worth a hundred billion of dollars, as well as the implementation of the eight major directions’ set out in the 2017 Policy Address.
Given the effort, Hong Kong now has ‘universities with strong R&D capabilities, a pool of local and foreign talents, a fervent R&D atmosphere, as well as a thriving start-up ecosystem’. R&D outcomes may be witnessed through how technology has been successfully applied to solve problems brought about by the pandemic.
Smart City Blueprint for Hong Kong
The Smart City Blueprint for Hong Kong 2.0 containing over 130 smart city initiatives will be released to promote how a smart city and the use of I&T can benefit people’s daily lives.
“iAM Smart” will also be launched to further promote Smart Government and the digital transformation of the society, initially offering over 20 public services.
Shenzhen/Hong Kong Innovation and Technology Co-operation Zone
There will be increased co-operation between Hong Kong and Shenzhen in developing an international I&T hub in the Greater Bay Area (GBA) and a joint development of the Shenzhen/Hong Kong Innovation and Technology Co-operation Zone (SITZ), which comprises the Shenzhen Innovation and Technology Zone and the Hong Kong-Shenzhen Innovation and Technology Park (HSITP) at the Lok Ma Chau Loop.
The feasibility of allowing the Hong Kong Science and Technology Parks Corporation (HKSTPC) to lease and manage certain areas of the Innovation and Technology Zone in Futian, Shenzhen, are being explored by the city governments. The goal of the exercise is to facilitate institutes and enterprises that are interested in conducting their businesses in the GBA to establish a presence in the SITZ.
Global STEM Professorship Scheme
A Global STEM Professorship Scheme is proposed to be launched for a period of five years at an estimated cost of $2 billion to attract talents currently working overseas to work in Asia and participate in the rapid I&T development in Hong Kong.
Young Technology Talents
Several large-scale technology enterprises in Shenzhen have indicated their desire to provide employment opportunities in the GBA for young I&T talents of Hong Kong. The proposed Greater Bay Area Youth Employment Scheme is expected to offer several hundred of positions for the I&T sector.
Our Take on The Matter
The government seems determined to pick up the pace in developing Hong Kong into an international I&T hub. Local businesses and entrepreneurs with I&T initiatives and capabilities should promptly get on board and take full advantage of the resources made available. For Mainland and overseas corporations, in deciding on the locality of their global or APAC I&T hubs, they should now consider the synergies that may be brought about by this initiative, the Belt and Road Initiative, and the GBA impacts, among other things.
From a tax perspective, Hong Kong has an enhanced tax reduction scheme that promotes the undertaking of R&D activities locally. Given the relevant conditions are met, taxpayers may claim up to 300% of its R&D expenditure up to a prescribed limit.
* * *
Want to learn more about how your business may take advantage of Hong Kong’s positioning as an I&T hub and the relevant tax incentives and implications, including the enhanced R&D deduction scheme? Please feel free to contact us at inquiries@rillatax.com.