The Hong Kong government today published in the official gazette a new law increasing the tax deduction for expenditures incurred by businesses for research and development (R&D) activities undertaken in Hong Kong.
“To encourage more enterprises to conduct R&D locally so as to promote technological innovation and economic development as well as to groom local R&D talent, the Amendment Ordinance will provide enhanced tax deduction. This also addresses the calls from the business community. We aim to encourage more R&D investment from private enterprises, thereby gradually reversing the ratio of public sector expenditure versus private sector expenditure on R&D from government-led to private-led, which is more sustainable,” a A government spokesman said.
The new law allows up to HKD 2 million (USD ~259,000) of specified expenditures to qualify for a 300 percent tax deduction if made to a designated local research institution. Expenditures past that threshold qualify for a 200 percent tax deduction.
The new law applies to payments made after April 1, the government said.
Hong Kong’s Commissioner for Innovation and Technology is charged with designating which groups qualify as “designated local research institutions” for purposes of the enhanced tax deduction. Corporations can be so designated, as can universities and other institutes.
Interesting. NZ and HK are increasing their incentive for R&D whereas Australia is reducing it and AusIndustry is purposely attacking local Software companies for their Innovation and claim of R&D. The Australian scheme has low barriers to enter (application and approval)… you get the benefit (cash) and years later, they (AusIndustry) investigate you and ask you for their money back – This inhibits local R&D and destroy companies along the way. Australia – the cleaver country!