On Wednesday, 23rd February 2022, Financial Secretary Paul Chan delivered the Hong Kong budget 2022/23.
He unveiled economic measures to get Hong Kong to recover from the lengthy battle against the COVID-19 pandemic over the past two years. The designated fund for the anti-epidemic efforts will reach up to HK$ 67.5 billion.
Hong Kong is still fighting against its fifth wave of the pandemic spread. The pandemic has made a remarkable hit to the Hong Kong economy, leading to a shortfall in revenue, and a sharp decrease in consumption. SMEs have been experiencing hard times. Many of them had to shut down their businesses or are facing such a decision.
In the budget statement, the financial secretary introduced new tax policies with a significant tax reduction regime for businesses. Besides, SMEs will also enjoy multiple support programs to revive and continue growing their businesses.
Tax-reduction policies for businesses and individuals, more preferable loan limits
Propose tax concessions for family investment companies. Eligible private companies run by single-family offices will receive a certain amount of tax reduction.
Implement certain one-off measures to reduce taxes. The government will carry out certain tax-cutting policies to lower the tax burden for taxpayers. One key policy is decreasing profits tax for the year of assessment 2021/22 by 100%, subject to a cap of $10,000.
Cut tax for resident workers as tenants. A reduction of HK$ 100,000 will be eligible for those who are paying housing rent while paying salaries tax or tax under personal assessment.
Allow higher loan limits for homeowners. First-time house buyers are eligible to borrow 90% of the property value, which is not over HK$ 10 million. For the second buying time, buyers can borrow 80% of the property value which is not over HK$ 12 million.
Shift from a 5% flat rate to a progressive tax rate for domestic properties. The progressive rate will be 5, 8, or 12% based on the rateable value of properties. The implementation will be from 2024 to 2025.
In 2022/23, for non-domestic properties, the government will provide tax rate concessions for residential properties with a limit of HK$ 5,000 in the two first quarters. Next two quarters, the limit will be HK$ 2000.
Set new tax rates for multinational corporations. In response to Economic Cooperation and Development’s international tax reform, multinational firms will be subject to a global minimum tax rate of 15 %. The domestic minimum top-up tax will also apply to these corporations.
Consumption voucher handouts of HK$ 10,000
The Hong Kong government will hand out electronic vouchers to 6.6 million permanent residents and new immigrants aged 18 or above to stimulate purchasing power. The vouchers can be used for digital consumption. The handouts are in response to the spending decline that significantly damaged local enterprises.
The designated fund costs HK$ 66.4 billion. The handouts will be settled in 2 installments. The first HK$ 5,000 installment will be delivered in April, and the second one will be done in the middle of the year.
Other support programs for local enterprises
To help small enterprises, the government provides some programs to back up SMEs, and local enterprises in general. Certain industries have promising growth pathways. Besides the extension of the loan scheme, more subsidy programs will be granted.
Waive business registration fees in Hong Kong. In 2022/23, Hong Kong companies are exempt from registration fees. This will help businesses to cut down costs and encourage the growing number of company formation.
Waive 75% of certain expenses. The government will continue to waive rental fees and utility bills to eligible enterprises.
Invest in innovation and technology. A significant amount of funds is designated for promoting technology development to stimulate enterprises’ growth.
- HK$ 5 billion Strategic Tech Fund to invest in tech enterprises and projects;
- HK$ 10 billion to promote life and health technology;
- HK$ 440 million to support key laboratories and research centers;
- HK$ 16 million to promote tech startup;
- HK$ 600 million to promote e-government audit conduction.
Promote investment in multiple industries. To help certain industries, especially ones that have been suffering severe damage from the pandemic, many special programs will be launched. Such industries are financial services, tourism, trade, aviation & maritime, agriculture & fisheries, arts & culture, and investment.
For detailed information about the Hong Kong budget plan 2022/23 and how the government can support your business, please read here.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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