LSP Valuation Under the Subsidy Scheme
Valtech’s valuation team has recently completed a long service payment (“LSP”) valuation for a Hong Kong medical company.
With the Hong Kong government confirming the subsidy scheme, the detailed arrangement for the abolition of MPF offsetting mechanism is finalized. The 25-year subsidy scheme will cover part of the increase in LSP arising from the new legislation, helping the employers to gradually adapt to the new regulation. We foresee that the subsidy scheme can soon be considered in reporting future LSP provision for the upcoming fiscal year, lightening the LSP provision burden appearing on the balance sheet.
Valtech Valuation is highly experienced in LSP assessment and also alerts the recognition of the subsidy scheme. We have been actively studying the addition of the subsidy scheme in our internally developed programme to calculate LSP provisions. We also closely monitor the latest updates from HKICPA, in case they issue new guidance considering the subsidy scheme.
The subsidy scheme has further increased the complexity in LSP assessment. It is highly recommended to appoint a specialist to assist in these valuations. Valtech Valuation has a strong track record on LSP valuation which has passed the review from various Big 4 audit teams. We also provide further support in providing relevant figures for accounting disclosures such as sensitivity testing and discount rate, ensuring that our client meets the disclosure requirements.