According to a recent study by foreign exchange education platform Forex Suggest, Hong Kong is the most cryptocurrency-ready jurisdiction in the world because of its long history as a regional centre of trade and commerce, its favourable tax regime, the large number of cryptocurrency ATMs and businesses operating in the blockchain and related industries in the city.
Hong Kong has no capital gains tax, and only frequent cryptocurrency trading is treated as income, which is then subject to profits tax, capped at 16.5 per cent.
Around the world, billions of dollars in income go unreported annually in digital asset trading. In the US, which imposes capital gains tax on the sale of cryptocurrency and income tax on cryptocurrency mining, the standard tax form now asks whether the individual has engaged in virtual currency transactions.
The European Union passed legislation in April that will require the tracing of cryptocurrency transactions. India has a 30 per cent tax on cryptocurrency profits and also requires exchanges to deduct a 1 per cent tax on transactions above a certain amount and pay that tax to the central government.
It is clear that cryptocurrency’s adoption into the tax system has been hindered by several challenges. One issue is the anonymous nature of cryptocurrency transactions, which complicates government tracking and regulation. Furthermore, the diversity and constant evolution of cryptocurrencies make it challenging for governments to stay abreast of all developments.
A significant portion of the population also lacks a clear understanding of the mechanisms and regulations related to cryptocurrency, which can impede its effective use. Even though the Organisation for Economic Cooperation and Development has developed a framework for the exchange of cryptocurrency-related information between countries, its full-scale implementation still awaits further regulatory efforts. Moreover, the rapid changes in the cryptocurrency sector can make it difficult for government agencies to keep up.
To navigate these challenges, policymakers could initiate several measures. A starting point would be to clearly define the tax implications of cryptocurrency use. Concurrently, they could launch educational campaigns to inform the public about the significance of fulfilling tax obligations on cryptocurrency earnings and provide insights into the workings of digital currencies. For example, cryptocurrency tax calculators are now available for some jurisdictions.
These actions could facilitate safer use of cryptocurrencies, ensuring they are integrated into the economic system in a manner that is beneficial to all parties.
Professor Haitian Lu and Dr Sirui Han, Policy Research Centre for Innovation and Technology, Hong Kong Polytechnic University
Fine-tune top talent scheme to really plug gaps
Hong Kong’s talent gap may be more evident in industries such as healthcare, the biosciences, information technology and artificial intelligence. Enticing people to work in these and other industries facing a shortage of local talent should be the main focus.
But I have observed that some of those so-called top talent under categories B and C of the scheme took on jobs that locals could handle, such as administration, marketing, human resources and even insurance. This would affect local fresh graduates who are looking for jobs.
When reviewing new applications or visa renewals, the government should consider professional necessity rather than just where the applicant earned their degree.
Chloe Hui, Yuen Long
Roaming charges due to junk calls a further burden
We are inundated by junk calls for which we have to pay roaming charges if we answer them when travelling. If we do not answer, the call gets diverted to one’s voice mail and then one is charged as the call is completed. So is the answer then to disable one’s voice mail?
Why should a consumer have to choose between inconvenience (disabling voice mail) and paying for incoming roaming calls, thereby making the telecoms companies richer. Surely this is not something the government would like to encourage.
Narayan Mulchandani, Repulse Bay
Why use precious land to serve a small privileged group?
The captain of the Hong Kong Golf Club said, “We have a world-class golf course but it is only used as a public park. What is the point?” I say, “We have a huge swathe of land but it’s only used to serve a very small group of privileged people. What is the point?”
Ringo Yee, Tuen Mun
