ENG-2019 — Page 92

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The Economy

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 two million assessments in the Government Rent Roll on 1 April 2019. Total government rent collected in 2018-19 was $12.1 billion, or 2 per cent of total government revenue.

Under the Dutiable Commodities Ordinance, excise duties are levied on four commodities to be consumed locally, namely hydrocarbon oil, liquor, methyl alcohol and tobacco, irrespective of whether they are manufactured locally or imported. The Customs and Excise Department collects these duties, which totalled $10.6 billion in 2018-19, or about 1.8 per cent of total government revenue, of which 59.3 per cent was from tobacco, 35.3 per cent was from hydrocarbon oil, 5.3 per cent was from liquor, and 0.1 per cent was from methyl alcohol and other alcohol products.

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 $9.4 billion in 2018-19, or 1.6 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 $16.2 billion, or 2.7 per cent of total revenue, in 2018-19, Government-operated public utilities, the most important of which, in revenue terms, is the provision of water supplies, generated about $4.4 billion, or 0.7 per cent of total revenue.

Land transactions generated some $116.9 billion, or about 19 per cent of total government revenue, in 2018-19. 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

Hong Kong strives to expand its network of comprehensive avoidance of double taxation agreements (CDTAs) to improve the business environment and facilitate the flow of trade, investment and talent with the rest of the world. The 43 CDTAs signed by the city as at end- 2019 help reduce tax burdens on taxpayers and eliminate uncertainties over tax liabilities.

Hong Kong has always been supportive of international efforts to enhance tax transparency and combat tax evasion. The territory implements the Organisation for Economic Cooperation and Development's (OECD) global standard on the automatic exchange of financial account information in tax matters and the exchange of information on request. The legislative framework for implementing the OECD's Base Erosion and Profit Shifting package and for codifying the transfer pricing principles came into force in 2018. Hong Kong will continue to ensure its tax system complies with the prevailing international standards.

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