Chief Executive Carrie Lam has announced a huge reduction to standard profits tax, halving the amount businesses need to pay on the first HK$2 million from 16.5 percent to 8.25. Profit above HK$2 million will continue to be taxed at the usual rate. The tax break is only designed to benefit small and medium enterprises, and to address concerns that big businesses could take advantage of the reduction, Lam said each group of enterprises would only be able to nominate one firm to enjoy the lower rate. Lam also announced a move to encourage businesses to allocate more money to research and development, with the first HK$2 million they spend on R&D getting a 300 percent tax deduction, with a 200 percent deduction applied to any further spending. The CE said her administration is aiming to double local spending on R&D to 1.5 percent of GDP within her government’s five-year term.