ENG-1999 — Page 95

THE ECONOMY

purchases, suppliers may be required to undergo a qualification exercise before tendering to ensure that they are capable in terms of financial and technical standing and reliability in performance.

Tender invitations are published in the Government of the Hong Kong Special Administrative Region Gazette and four local newspapers and are mailed to suppliers registered with the department. Consulates and overseas trade commissions are also informed. To allow easy access by suppliers outside Hong Kong, the department also includes its tender invitations and related information on the Internet. The department is also developing a system enabling suppliers to submit bids through the Internet. The new electronic tendering system is scheduled to go live in early 2000.

In 1998-99, the department placed orders of a total value of $5.01 billion, purchasing from 36 different countries. Apart from the Mainland, the major sources of supply were the United States, the United Kingdom, Switzerland and Germany. Major items of purchase included pharmaceutical supplies, computer systems, water treatment chemicals, medical equipment, scientific and analytical equipment and fuel oils.

Supplies of goods to meet general needs are held in the purpose-built Government Logistics Centre in Chai Wan which came into operation in 1996. The operations are assisted by a modern computerised system with bar-coding functions which provides, among others, on-line communication with customers. In 1998–99, the total value of stock items acquired and issued to customers were $331 million and $369 million respectively.

The department also seconds supplies staff to other departments to ensure a professional approach to acquisition and maintenance of stores and equipment.

Revenue Sources

Hong Kong's tax system is simple and relatively inexpensive to administer. Tax rates are low, and the Government accords a high priority to curbing tax evasion and minimising opportunities for tax avoidance. The major sources of revenue are profits tax, salaries tax, returns on government properties and investments, and revenue from land transactions. Other significant sources include stamp duty on property and stock transactions, betting duty, fees and charges for services provided by the Government and duties on certain specified commodities. (For major sources of revenue, see Appendix 15).

The Inland Revenue Department collects about 50 per cent of total revenue, including profits and salaries taxes, stamp duty, betting duty, estate duty and hotel accommodation tax. Profits and salaries taxes, which alone accounted for some 30 per cent of total revenue in 1998-99, are levied under the Inland Revenue Ordinance. Persons liable to these taxes may be assessed on three separate and distinct sources of income: business profits, salaries and income from property.

Profits tax is charged only on net profits arising in Hong Kong, or derived from a trade, profession or business carried on in Hong Kong. At present, profits of unincorporated businesses are taxed at 15 per cent and profits of corporations at 16 per cent.

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