It was reported on 31 May 2012, that the government will not introduce a lower profits tax rate for micro-enterprises.
There were about 300,000 small and medium-sized enterprises (SMEs) in Hong Kong by the end of 2011, accounting for more than 98% of local enterprises, and that around 90% of those SMEs were enterprises with less than 10 employees, the so-called ‘micro-enterprises’.
Currently, all operating expenses and capital expenditure permitted by the law are deductible from chargeable profits, and providing additional tax concessions to micro-enterprises would in the view of the government only violate the long-standing principle of neutrality in the tax regime and create loopholes for tax avoidance.
