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The Economy
All motor vehicles imported for use on roads are subject to First Registration Tax under the Motor Vehicles (First Registration Tax) Ordinance. The Customs and Excise Department assesses the taxable value of vehicles to facilitate the Transport Department's collection of this tax, which totalled $9.3 billion in 2015-16, or 2.1 per cent of total government revenue.
It is government policy that fees charged by the government should in general be set at levels adequate to recover the full cost of providing the goods or services. Certain essential services are subsidised by the government or provided free of charge. Fees and charges for goods and services provided by the government generated about $15.1 billion, or about 3 per cent of total revenue, in 2015-16. Government-operated public utilities, the most important of which, in revenue terms, is provision of water supplies, generated about $4 billion, or about 1 per cent of total revenue.
Land transactions generated some $60.9 billion, or about 14 per cent of total government revenue, in 2015-16. All revenue from land transactions is credited to the Capital Works Reserve Fund to finance the Public Works Programme.
Tax Treaties and International Tax Cooperation
Comprehensive double taxation agreements (CDTAs) with major economies improve the business environment and facilitate the flow of trade, investment and talent between Hong Kong and the rest of the world. These agreements reduce tax burdens on individuals and enterprises and eliminate uncertainties over tax liabilities. As at end-2016, Hong Kong had signed 35 CDTAs.
The government has in place a legal framework to enter into tax information exchange agreements and had seven such agreements as at end-2016.
In June 2016, Hong Kong put in place a legal framework to implement the Organisation for Economic Cooperation and Development's (OECD) new global standard on automatic exchange of financial account information on tax matters to enhance tax transparency and combat cross-border tax evasion. The first exchanges will start in 2018.
In June 2016, Hong Kong also pledged commitment to the consistent implementation of the OECD's new package of measures to tackle base erosion and profit shifting. With the pledge, Hong Kong became an Associate in the OECD's inclusive framework for implementing the package together with 90 other jurisdictions. The Financial Services and the Treasury Bureau began a consultation exercise in October to gauge stakeholders' views on implementing the package.
Government Procurement
Hong Kong, China is a signatory to the Agreement on Government Procurement of the World Trade Organisation (WTO GPA). Government procurement is undertaken on the principles of openness, transparency, fairness, public accountability, value for money and non-discrimination. Open tender procedures are widely used. Restricted or single tender procedures may be used under exceptional circumstances.
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