ENG-2015 — Page 87

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The Economy

The Rating and Valuation Department is also responsible for the billing and collection of government rent for properties held under land leases granted on or after 27 May 1985, or on the extension of non-renewable land leases. Government rent is levied at 3 per cent of the rateable value of the property and is adjusted in step with any subsequent changes in the rateable value. There were about 1.9 million assessments in the Government Rent Roll on 1 April 2015. Total government rent collected in 2014-15 was $9.3 billion, or about 1.9 per cent of total government revenue.

Fees and charges for services provided by government departments generated about $14.6 billion, or about 3 per cent of total revenue, in 2014-15. It is government policy that fees should in general be set at levels sufficient to recover the full cost of providing the services. Certain essential services are, however, subsidised by the government or provided free of charge. Government-operated public utilities generated about $4 billion, which accounted for about 1 per cent of total revenue; the most important of these, in revenue terms, is provision of water supplies.

Lastly, some $77.8 billion, or about 16 per cent of total government revenue in 2014-15, was generated from land transactions. All revenue from land transactions is credited to the Capital Works Reserve Fund to finance the Public Works Programme.

The government set up in 2014 a Housing Reserve to support its 10-year public housing supply target. For 2014-15, the investment income in respect of the fiscal reserves for 2014 of $27.5 billion was retained within the Exchange Fund as provision for the Housing Reserve, and was not paid to the government on 31 December 2014.

Network of Tax Treaties and International Tax Co-operation

Comprehensive agreements for the avoidance of double taxation (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. They also enhance Hong Kong's position as an international business and financial centre. By the end of 2015, Hong Kong had signed 33 CDTAs.

In 2013, the government further enhanced the exchange of information arrangements under CDTAs and put in place a legal framework to enter into tax information exchange agreements with other jurisdictions when necessary. By the end of 2015, Hong Kong had signed seven such agreements.

In September 2014, Hong Kong indicated to the Organisation for Economic Co-operation and Development (OECD) it would implement a new global standard on automatic exchange of financial account information on tax matters to enhance tax transparency and combat cross- border tax evasion. Subject to enactment of the necessary domestic legislation by 2017, Hong Kong will begin the first automatic information exchanges on a reciprocal basis with appropriate jurisdictions by the end of 2018, the OECD's required timeline. The government conducted a consultation exercise from April to June 2015 to gauge views on how to adapt the new standard to Hong Kong.

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