Financial Secretary Mr. Paul Chan delivered the budget speech on February 26 th, 2020. After 15 years of budget surplus 2019/20 ended in $3.6 billion deficit, caused by unfavourable social and economic climates. The following 2020/21 is forecasted to remain challenging, with $139 billion budget deficit forecasted.
The 2020/21 budget was tailored with focuses on supporting enterprises, safeguarding jobs, smoothening livelihoods, and stimulating the economy. With these focuses, there are quite numbers of incentives and relief measures offered by the government to support Hong Kong economy. The key highlights to be noted in the budget speech are:
- Cash disbursement of $10,000 to Hong Kong permanent residents aged 18 or above.
- Profit tax, salary tax, and personal assessed tax reductions for 2019/20 by 100%, with
- Domestic properties rates waivers for 4 quarters of 2020/21, with $1,500 ceiling / quarter.
- Non-domestic properties rates waivers for 4 quarters of 2020/21 – with $5,000 ceiling /
quarter for the first 2 quarters, and $1,500 ceiling / quarter for the remaining 2 quarters.
- Introduce full government guaranteed low interest loan for enterprises, with maximum loan
amount of $2 million with up to 3 years repayment period and moratorium on principal
repayment for the first 6 months.
- Business registration fee waiver for 2020/21.
- Company annual return waiver for 2 years.
- Subsidise 75% of electricity charge for non-residential, with $5,000 ceiling per month.
- Subsidise 75% of water and sewage charges for non-domestic household for 4 extra months,
with $20,000 and $12,500 ceilings per month, respectively.
Hong Kong Tax
It is said that the reason behind the forecasted deficits from 2021/22 to 2024/25 financial years, are because the government revenue could not keep up with the expenditures. To address this, the government needs to seek new sources of revenue or revise the tax rates. The government will also look for advices from relevant subject matter experts, regarding tax regime in respond of the OECD’s setting to impose a global minimum tax rate.