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Thursday, February 27, 2020

Hong Kong Budget 2020/21

By Steven Kwan:

On 26 February 2020, Mr. Paul Chan, Financial Secretary, delivered his fourth budget speech.  He forecasts economic growth of -1.5% to 0.5% in 2020.

Facing the threat posed by the novel coronavirus outbreak and the tough economic environment, the Financial Secretary proposes a number of measures that will help supporting enterprises, safeguarding jobs, stimulating the economy and partly relieving financial burden of people living in Hong Kong.  We highlight some of the measures as follows: -

Budget highlights

1. Profits Tax

  • Reducing Profits Tax by 100% for 2019/20, subject to a ceiling of HKD20,000.

2. Salaries Tax/ Tax under Personal Assessment

  • Reducing Salaries Tax and tax under Personal Assessment by 100% for 2019/20, subject to a ceiling of HKD20,000.

3. Rates

  • Waiving rates for non-domestic properties for four quarters for 2020/21, subject to a ceiling of HKD5,000 per quarter in the first two quarters and a ceiling of HKD1,500 per quarter in the remaining two quarters for each rateable non-domestic property.
  • Waiving rates for residential properties for four quarters for 2020/21, subject to a ceiling of HKD1,500 per quarter for each rateable residential property.

4. Business registration fee

  • Waiving business registration fees for 2020/21.

5. Registration fee for annual returns

  • Waiving registration fees for all Company Annual Returns (except for late delivery) by the Companies Registry for two years.

6. Other relief measures

  • Disbursing a sum of HKD10,000 to Hong Kong permanent residents aged 18 or above.
  • Providing an extra month allowance to recipients of CSSA, Old Age Allowance, Old Age Living Allowance, Disability Allowance and Work Incentive Transport Subsidy.
  • Paying the examination fees for school candidates sitting for the 2021 Hong Kong Diploma of Secondary Education Examination.
  • Providing a subsidy to each eligible non-domestic household accounts for four extra months to cover 75% of the monthly billed electricity charges, subject to a monthly cap of HKD5,000 per account.
  • Waiving 75% of water and sewage charges payable by non-domestic households for four extra months, subject to a monthly cap of HKD20,000 and HKD12,500 respectively per household.
  • Providing a new round of rental subsidy of HKD100 million for 6 months to local recycling enterprises.
  • Reducing rental by 50% for another 6 months for eligible tenants of government properties, government land and EcoPark.
  • Reducing rental and fees by 50% for another six months for eligible operators of properties covered by short term waivers.
  • Providing hirers of civic centres under the Leisure and Cultural Services Department with a 50% reduction of hire charges for another 6 months.
  • Offering another 6 months of fees and rent reduction for cruise lines and existing tenants of the Cruise Terminal.

7. Concessionary measures under the SME Financing Guarantee Scheme

  • Introducing a concessionary low-interest loan under the SME Financing Guarantee Scheme, under which 100% guarantee will be provided by the Government.
  • The maximum amount of loan for eligible enterprise is based on the SME’s salary and rental expenditures for six months, subject to a ceiling of HKD2 million.

8. Financial services industry

  • Waiving the stamp duty on stock transfers paid by Exchange Traded Fund (ETF) market makers in the course of creating and redeeming ETF units listed in Hong Kong.
  • Issuing green bonds totalling HKD66 billion within the next 5 years.
  • Further issuance of iBond this year.
  • Issuing Silver Bonds to Hong Kong residents aged 65 or above.
  • Lowering the minimum entry age of the HKMC Annuity Plan from 65 to 60.
  • Launching a pilot scheme to offer through banks fixed-rate mortgage loans, with interest rates of 2.75%, 2.85% and 2.95% per annum for periods of 10, 15 and 20 years respectively, capped at a ceiling of HKD10 million per loan transaction.
  • Establishing a limited partnership regime and providing tax concession for carried interest issued by private equity funds to attract them to domicile and operate in Hong Kong subject to the fulfilment of certain conditions.

9. International Transportation Centre

  • Providing tax concessions for the ship leasing business, including offering a Profits Tax exemption to qualifying ship lessors and a half-rate profits tax concession to qualifying ship leasing managers.
  • Providing a 50% tax concession to eligible insurance business including marine insurance.

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