On Wednesday, 23rd February 2022, Financial Secretary Paul Chan delivered the Hong Kong budget 2022/23.
He unveiled economic measures to get Hong Kong recover from the lengthy battle against 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, 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. To lower the tax burden for taxpayers, the government will carry out certain tax-cutting policies. 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 rents while paying salaries tax or tax under personal assessment.
Allow higher loan limits for homeowners. For first-time buyers of a house, it is 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 property value which is not over HK$ 12 million.
Shift from 5% flat rate to 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 2024/25.
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 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 %. Additionally, domestic minimum top-up tax will be also applicable to these corporations.
Consumption voucher handouts of HK$ 10,000
To stimulate the purchasing power, the Hong Kong government will hand out electronic vouchers to 6.6 million permanent residents and new immigrants aged 18 or above. 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. Beside the extension of loan scheme, more subsidy programs will be granted.
Waive business registration fees in Hong Kong. In 2022/23, Hong Kong companies are exempt from the 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. To stimulate enterprises’ growth, a significant amount of funds is designated for promoting technology development.
- 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 centres;
- 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 damages from the pandemic, many special programs will be launched. Such industries are financial services, tourism, trade, aviation & maritime, agriculture & fisheries, arts & culture, investment.
For detailed information about Hong Kong budget plan 2022/23 and how the government can support your business, please read here.