Hong Kong Industry Bodies Propose Northern Metropolis as a Tax Innovation Pilot Zone for AI and Emerging Industries

Hong Kong's policy address and first five-year plan are about to be released, and the finance and accounting professions have put a pile of tax proposals on the table beforehand. The thinking is broadly similar: keep deepening the concessions for funds, family offices and carried interest, but also overhaul the corporate treasury centre regime and tie it to Northern Metropolis development so the city stays competitive internationally. Lau Ming-yeung of CPA Australia suggests adding a pre-approval step to treasury centre concessions to reduce tax uncertainty, while EY's Cheng Kit-san argues the management thresholds of the two-tier system could be aligned and hard tests such as the number of associated companies and operating expenditure relaxed, letting firms prove economic substance through group scale, cross-border financing and strategic contribution. Deloitte China's Poon Chung-kit wants more flexible interest deduction: as long as the overseas jurisdiction has a sufficient statutory corporate income tax rate and a normal filing record, the deduction should stand without monitoring whether the counterparty is profitable; he also proposes an 8.25 percent concessionary rate for firms running Asia-Pacific headquarters in Hong Kong. Cheng suggests turning the Northern Metropolis into a pilot zone where industrial and tax policy work together, studying a Qualifying Refundable Tax Credit focused on AI, life and health technology, green tech and advanced manufacturing so that early-stage startups benefit too.