Edmund Wong, Member of the Legislative Council of Hong Kong, Accountancy Functional Constituency
There are different challenges ahead in 2025. One of them is proposed legislation on the minimum tax for multinational enterprise (MNE) groups, which is now proposing a Hong Kong minimum top-up tax for MNE groups. These changes, driven by the OECD’s Base Erosion and Profit Shifting 2.0 (BEPS 2.0) initiative, aim to establish a global minimum effective tax rate of 15 percent for MNEs. While this represents a critical step toward international tax fairness, it also poses challenges to Hong Kong’s long-standing low-tax advantage and its economic recovery.
Hong Kong has historically thrived as a global financial hub, attracting businesses with its simple and competitive tax regime, including low corporate tax rate and no taxes on capital gains or their offshore profits. This low-tax environment has been a cornerstone of our economic success, fostering investment, innovation, and job creation. However, the introduction of the global minimum tax and the corresponding Hong Kong minimum top-up tax might cut out our traditional competitive edge. MNEs operating in Hong Kong with effective tax rates below 15 percent will be required to pay a top-up tax, effectively aligning their tax burden with the global standard. This shift may reduce Hong Kong’s appeal as a low-tax jurisdiction. While the global minimum tax aims to create a level playing field, it may inadvertently slow down Hong Kong’s economic recovery by increasing operational costs for MNEs. This could lead to reduced business activity, lower job creation, and slower GDP growth. Furthermore, the potential outflow of multinational businesses seeking more favourable tax environments could exacerbate these challenges, undermining Hong Kong’s position as a global financial centre.
“While this represents a critical step toward international tax fairness, it also poses challenges to Hong Kong’s long-standing low-tax advantage and its economic recovery.”
From a fiscal perspective, the introduction of the minimum top-up tax presents both opportunities and challenges. On one hand, the additional tax revenue from MNEs could address the government’s fiscal deficit, which has been strained by increased public spending during the pandemic and economic downturns. On the other hand, the potential decline in foreign investment and business activity could offset these gains, leading to lower overall tax revenues in the long term. The Hong Kong government should balance these dynamics to ensure fiscal sustainability while maintaining Hong Kong’s attractiveness as a business hub.
To mitigate these challenges, Hong Kong must proactively adapt to the new global tax landscape. This includes exploring ways to enhance our non-tax advantages, such as strengthening our legal system, improving infrastructure, and fostering innovation and talent development. Additionally, the government should consider targeted measures to support affected businesses, such as tax incentives for research and development or green investments, to maintain Hong Kong’s competitiveness.
As we navigate this transition, it is imperative for stakeholders, including the accountancy sector, to collaborate with the government in developing strategies that safeguard Hong Kong’s economic resilience and long-term prosperity. Together, we can turn these challenges into opportunities for sustainable growth.
Rebecca Chan, Chief Financial Officer at Cloudbreak Pharma, and an Institute member
This year is shaping up to be another transformative one for technology and life sciences. The technology landscape is likely to be dominated by artificial intelligence (AI), robotics and extended reality as we continuously explore problem-solving beyond the boundaries. In terms of life sciences, areas such as cell therapy and novel medicine are growing more crucial as our population ages. The trend of people spending unprecedented hours on digital screens daily, combined with our growing appetite for complex electronic functions and entertainment, leads to rising cases of vision problems in younger generations and creates exciting opportunities in ophthalmology.
We will be seeing more merger and acquisitions and consolidations in technology and life science companies in 2025. In the field of technology, companies are particularly eager to acquire AI capabilities and talent, while biotech firms seek to strengthen their drug pipelines and spread clinical trial costs. Looking ahead, one trend that I anticipate is an increased emphasis on platform technologies that can generate multiple product candidates, rather than single-asset companies.
“With great opportunities for value creation presented by platform licensing, I am excited about 2025.”
A platform deal is when a biotech company licenses out its core technology that can be used to create multiple products, rather than licensing a single drug candidate. Instead of licensing single products, companies now monetize entire technology platforms. A typical deal structure for a platform now includes US$50-100 million in upfront payments, research funding, and potential milestone payments that could exceed US$1 billion across multiple programmes. These deals are attractive because they provide immediate capital while preserving long-term upside through royalties, typically ranging from 6-12 percent of net sales.
With a platform deal’s access to research services and potential manufacturing commitments, revenue recognition becomes particularly challenging when dealing with multiple performance milestones. This complexity increases when deals include material rights for future targets or indications, requiring careful analysis of standalone selling prices and allocation of transaction prices.
Though accounting implications for platform licensing are complex, we can still have success when remaining mindful of market fundamentals. Handling these deals require solid financial systems, clear revenue recognition policies, and strong relationships with technical advisors.
With great opportunities for value creation presented by platform licensing, I am excited about 2025. I urge fellow Institute members to stay on top of trends, and contribute our expertise to the many opportunities that lie ahead.
Nami Wong, Chief Operating Officer at Castfact Limited, and member of the Young Members Committee
The accounting profession is navigating a rapidly changing landscape marked by economic fluctuations, environmental challenges, and technological advancements. As sustainability continues to rise in importance, there are two core themes that relate to what’s on my radar for this year.
The first is prioritizing meaningful connections. My career journey through the Big Four laid a solid foundation in accounting and finance, and was followed by a transition to a financial regulatory role that broadened my perspective on the profession’s societal impact. Now, as I embrace my journey in the start-up world, I recognize the power of collaboration.
A pivotal moment arose during a discussion with a good friend in the film industry, where our shared concerns about sustainability sparked an idea: what if we leveraged our respective expertise to create something impactful? This led to my recent collaborative efforts with creatives to establish a next-gen casting solution that prioritizes user engagement and community building to promote the growth of the film and TV industry. Our mission is to connect meaningful dots – people, places, and ideas – driving positive change. The saying, “If you want to go fast, go alone; if you want to go far, go together,” captures the essence of collaboration.
“As we progress through 2025, it is essential for accounting professionals to deepen their understanding of technology and sustainability.”
The second theme revolves around leveraging AI to become multidisciplinary. As we progress through 2025, it is essential for accounting professionals to deepen their understanding of technology and sustainability. The intersection of these fields demands a multidisciplinary skill set – contemporary challenges cannot be solved through a singular lens.
Throughout my start-up journey, I’ve faced various hurdles, particularly regarding technology. Gaps in technical knowledge became evident, as some team members lacked strong tech backgrounds. Communication challenges arose when articulating ideas to the tech team, complicating collaboration efforts. The rapid evolution of AI has necessitated a strategic repositioning of our start-up.
I remain optimistic that leveraging AI will enable us to synthesize knowledge across disciplines, enhancing problem-solving and fostering innovative solutions.
There is a quote from Steve Jobs that really resonates with me: “You can’t connect the dots looking forward; you can only connect them looking backwards.” For me, “connecting the dots” will always be on my radar.
