Hong Kong Budget 2021/22: Review of Proposed Tax Measures

On Wednesday, 24 February 2021, Financial Secretary Paul Chan Mo-po released the Hong Kong budget initiatives for the fiscal year 2021/22.

Hong Kong has been witnessing a challenging year of 2020 due to the widespread COVID-19 pandemic. This year, the budget plan will put emphasis into large-scale counter-cyclical measures worth over HK$120 billion with proposed tax measures to alleviate the economic adversity and pressure in Hong Kong.

What are proposed tax measures for businesses this year?

The counter-cyclical policies cost more than HK$120 billion in total. Coming to SMEs business support, there will be 100% government guaranteed low-interest loan with a ceiling up to HK$6 million. The repayment period may be extended up to 8 years.

In addition, there are many tax reduction approaches for taxpayers who are separately payable to salaries tax and profits tax.

PROFITS TAX

• A one-off reduction of profits tax for the year of assessment 2020/21 by 100%, capped at $10,000 per case.
• Waiver of the business registration fees for 2021/22 (from 1 April 2021 to 31 March 2022). Details can be found here.
• Rates concession given for non-domestic properties for 4 quarters in 2021/22, capped at $5,000 per quarter in first two quarters, and $2,000 per quarter in the following quarters

SALARY TAX

• A 100% reduction of salaries tax and tax under personal assessment for the YA 2020/21, with a cap of $10,000 per case.
• Rates concession given for domestic properties for 4 quarters in 2021/22, subject to a ceiling of $1,500 per quarter in the first two quarters, and a ceiling of $1,000 per quarter in the following two quarters for each rateable property.

STAMP DUTY

A new planned measure in the budget this year is that the rate of ad valorem stamp duty on stock transfers will grow up from 0.1 % to 0.13 % of the consideration or value of each transaction paid by buyers and sellers respectively.

The above tax measures can require legislative amendments for the formal implementation. The tax reduction will only be applicable to the final tax for the year of assessment 2020/21, but not to the provisional tax of the same year.

Please note that tax reduced does not include property tax. But, individuals with rental income (those eligible for personal assessment) may also be qualified for such tax reduction under personal assessment.

For further information on Hong Kong Budget 2021/22, you can visit this page.

Should you have any questions about starting a business in Hong Kong, feel free to drop us a chat message or send us an email via service@bbcincorp.com.