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Highlights of Hong Kong 2022/23 Budget

Source : The 2022-23 Budget (https://www.budget.gov.hk/2022/eng/io.html)

Economic Outlooks for 2022
  • Forecast GDP growth in real terms at 2% to 3.5%
  • Forecast headline inflation is 2.1% and underlying inflation is 2.0%
Major Proposed Measures

Source : https://www.budget.gov.hk/2022/eng/gallery/gallery.html?date=20220223A

Tax Concessions
Support Enterprise

Profits Tax

  • Reduce profits tax for the Year of Assessment (“YOA”) 2021/22 by 100%, subject to a ceiling of HKD 10,000.

Rate

  • Waive rates for non domestic properties for FOUR quarters of the YOA 2022/23, subject to a ceiling of HKD 5,000 per quarter in the first two quarters and a ceiling of HKD 2,000 per quarter in the remaining two quarters for each rateable non domestic property.

Business Registration Fees

  • Waive the business registration fees for the YOA 2022/23.
Relieve People’s Burden

Salaries Tax

  • Reduce salaries tax and tax under personal assessment for the YOA 2021/22 by 100%, subject to a ceiling of HKD 10,000.

Rate

  • Waive rates for residential properties for FOUR quarters of the YOA 2022/23, subject to a ceiling of HKD 1,500 per quarter for the first two quarters and a ceiling of HKD 1,000 per quarter for the remaining two quarters for each rateable property.
Issue Consumption Voucher
  • Issue electronic consumption vouchers in instalments with a total value of HKD 10,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above.
Fighting the Virus Together
  • Provide additional funding of about HKD 22 billion to strengthen testing work and provides additional support for the Hospital Authority (“HA”).
  • Provide additional funding of HKD 6 billion to procure more vaccines.
  • Provide additional funding of about HKD 7 billion to procure anti-epidemic items and services and implement anti-epidemic measures.
  • Provide additional funding of HKD 500 million to enhance environmental hygiene services
  • Inject HKD 12 billion for the construction of various anti-epidemic related facilities.
  • Earmarked HKD 20 billion for other potential anti-epidemic needs.
Others

For Enterprise

  • Continue to waive 75% of water and sewage charges payable by non domestic households for 8 months until 30 November 2022 subject to a monthly cap of HKD 20,000 and HKD 12,500 respectively per household.
  • Extend the waiver of existing 34 groups of government fees and charges for 12 months starting from October 2022. Sectors will be benefit from this measure includes but not limit to aviation, maritime, logistics, retail, catering, agriculture and fisheries, construction, tourism and entertainment.
  • Continue to grant 75% or fee concession for 6 months commencing from April 2022 for the eligible tenants of government properties and eligible short term tenancies and waivers under the Lands Department.
  • Extend the application period of all guarantee product under the SME Financing Guarantee Scheme (“SFGS”) to the end of June 2023.
  • The Special 100% Loam Guarantee under the SFGS will also be further increased the maximum loan amount per enterprise from the total amount of employee ways and rents for 18 month to that for 27 months and raise the loan celling from HKD 6 million to HKD 9 million and by extending the maximum repayment period from 8 years to 10 years.
  • Requested Hong Kong Monetary Authority (“HKMA”) to extend the Pre approved Principal Payment Holiday Scheme via the Banking Sector SME Lending Coordination Mechanism for six months to the end of October 2022.
  • The HKMA and the banking sector will offer enterprises the option of making partial repayment of principal over a longer period of time. This arrangement will also apply to the loans granted under the SFGS.
  • The Hong Kong Export Credit Insurance Corporation (“ECIC”) plans to launch the Export Credit Guarantee Programme on a pilot basis in March 2022 so as to help small and medium sized exporters secure export financing from banks more easily.
  • The ECIC will introduce the “Flexible Indemnity Ratio” arrangement in the second half in 2022 to enhance insurance coverage for exporters in order to encourage exporters to take larger orders from overseas buyers.

For People

  • Grant a subsidy of HKD 1,000 to each residential electricity account.
  • Provide an allowance to eligible social security recipients, equal to one half month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. Similar arrangements will apply to recipients of the Working Family Allowance.
  • Pay the examination fees for school candidates sitting for the 2023 Hong Kong Diploma of Secondary Education Examination.
  • Lower the threshold for the Public Transport Fare Subsidy Scheme from HKD 400 to HKD 200 from May 2022 to October 2022.
  • Proposed to provide a tax deduction for domestic rental expenses beginning from the year of assessment 2022/23 in order to ease the burden of renting a private property on taxpayers of salaries tax and taxpayers under personal assessment provided that the eligible taxpayers are not owners of domestic property subject to a deduction cap of HKD 100,000 per a year of assessment.
  • Extend the 100% Loan Guarantee Scheme for Individuals for one year until the end of April 2023. The maximum loan amount per applicant will increase from 6 times to 9 timers of his/her average monthly incoming during employment, capped at HKD 100,000. The maximum repayment period under the scheme will be extended to 10 years while the maximum duration of principal moratorium will be extended to 18 months.
  • The Quality Education Fund reserves HKD 2 billion to launch a three year programme beginning from the school year of 2022 to reinforce support for e learning. The subsidies will be provided to schools to buy mobile computer devices and portable Wi-Fi devices for loan to needy student.

Source : https://www.budget.gov.hk/2022/eng/gallery/gallery.html?date=20220223A

Enhancing Economic Resilience and Enriching Industrial Development
Financial Services
  • Proposed to issue no less than HKD 15 billion of inflation-linked retail bonds (i.e. iBond) and no less than HKD 35 billion of Silver Bond and no less than HKD 10 billion of retail green bonds in next financial years.
  • Proposed to provide tax concession for the eligible family investment management entities managed by single-family offices.
  • Increase funding of HKD 10 billion allocate to the Hong Kong Growth Portfolio under the Future Fund of which HKD 5 million for setting-up the Strategic Tech Fund and the remaining HKD 5 million will be used to set up Greater Bay Area (“GBA”) Investment Fund focusing on investment opportunities in the GBA.
  • Exam the revision of the listing requirements to meet the fundraising needs of technology enterprise.
  • Prepare to allow stocks traded via the Southbound Trading of Stock Connect to be denominated in RMN.
  • To explore enhancement measures for the Cross-boundary Wealth Management Connect Scheme in the Guangdong - Hong Kong - Macao Greater Bay Area.
  • Continue to issue green bonds totaling about USD 4.5 billion or equivalent.
  • Going to conduct a study on the implementation of a pilot scheme on infrastructure financing securitization and is expected to offer infrastructure financing securitization products with a total value of USD 450 million.
  • Allocate a funding of HKD 10 million for launching a new round of the Fintech Proof-of-Concept Subsidy Scheme.
Innovation and Technology (“I&T”) Development
  • Double the amount of subsidy to HKD 16 million to help universities realize their Research and Development outcome. The increased amount shall be provide to start ups of universities with private investment on a matching basis to one to one. Each start up may receive a yearly subsidy of up to HKD 1.5 million for a maximum of three years.
  • Earmark HKD 10 billion to provide more comprehensive support to further promote the development of life and health technology in Hong Kong.
  • Double the amount of subsidy to HKD 440 million to promote and conduct R&D activities to nurture local talent and to attract more local and overseas I&T talent.
  • Reserved HKD 600 million to conduct a comprehensive e government audit to promote further digitalization in government operations.
Tourism
  • Earmark HKD 1.26 billion to support and develop the tourism industry purpose to provide incentives to develop an launch tourism products with cultural and heritage elements, to sponsor training of tourism practitioners and to support the work of the Hong Kong Tourism Board.

Source : https://www.budget.gov.hk/2022/eng/gallery/gallery.html?date=20220223A

Building Capacity
Northern Metropolis
  • Reserve HKD 100 billion from the cumulative return of the Future Fund to set up a dedicated fund under the Capital Works Reserve Fund so as to expedite the implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis.
Talents

Financial Services

  • Planned to launch the Pilot Green and Sustainable Finance Capacity Building Support Scheme and implement the Pilot Scheme on Training Subsidy for FinTech Practitioners for training of professionals.

Innovation and Technology

  • Continue providing young people with internship and training opportunities through various schemes in order to provide incentives or subsidies for graduates to pursue a career in I&T. Consideration on rolling out more relevant measures to facilitate the entry of talent into Hong Kong.

Healthcare

  • Intend to increase recurrent allocation up to HKD 400 million as needed for enhancing training for medical professionals.
  • Provide 500 more designated places to provide subsidies for students to take self financing undergraduate programmes on healthcare.
  • Earmark 10 billion for the completion of works to upgrade and increase healthcare teaching facilities of universities which will have the capacity of coping with about 900 additional healthcare training places.

Arts and Culture

  • Allocate HKD 37 million to provide professional training for the conservators.
  • Inject HKD 100 million into the Cantonese Opera Development Fund to enhance the professional standards of the practitioners and to pursue continuous training.

Construction Industry

  • Allocate HKD 1 billion to the Construction Industry Council for supporting manpower training.

Encourage Continuing Education

  • Increase the subsidy ceiling of the Continuing Education Fund to HKD 25,000 and remove the upper age limit.

Source : https://www.budget.gov.hk/2022/eng/gallery/gallery.html?date=20220223A

Building Livable City
Land and Housing Supply
  • 13 residential sites will be comprised under the 2022/23 Land Sale Programme together with railway property development, private development and redevelopment projects as well as the Urban Renewal Authority (URA)'s projects, the potential land supply for the whole year is expected to have a capacity of providing about 18,000 units.
  • 4 commercial sites will be provide about 300,000 square meters of commercial floor areas.
  • Approximately 103 hectares of land shall be available in the coming 5 years for production of over 57,000 units of private housing.
  • Identified 350 hectares of land for the provision of about 330,000 public housing unit in the coming 10 years.
  • The completion of the private residential units will average over 19,000 units annually in 5 years from 2022 onwards. The projected first hand private residential unit supply for the next 3 to 4 years is 98,000 units.
  • More than 17,000 transitional housing units shall be provided from the identified sufficient land. Besides, more than 4,200 units and 11,000 units are expected for completion in 2022 and 2023 respectively.
  • Introduce more concessionary measures to encourage the adoption of Modular Integrated Construction in order to accelerate housing supply.
Building a Green City

Green Tech Fund

  • Inject HKD 200 million into Green Tech Fund to further promote decarburization and enhance environmental protection in Hong Kong.

Charging Facilities for Electric Vehicles

  • Inject HKD 1.5 billion to extend the EV-charging at Home Subsidy Scheme to promote the installation of EV charging-enabling infrastructure in car parks of the existing private residential buildings.

Enhance the Capability of the Low-lying Areas to Withstand Threats

  • Seek funding approval of about HKD 8.4 billion in 2022 for carrying out drainage improvement works in various districts to enhance the flood control capability.
Quality Living

Community Arts Scheme

  • Allocate HKD 20 million per year to regularize the Community Arts Scheme.

Heritage Conservation

  • Proposed to earmark HKD 1 billion for the Built Heritage Conservation Fund.
Caring and Inclusion
  • An additional expenditure over HKD 1.9 billion will be involved to continually strengthen community and residential care services as well as social work services to support the elderly, person with disabilities and children.
Public Finance

Increasing Revenue

  • It is not the appropriate time to revise the profits tax and salaries tax rates given that the business and individuals are under considerable financial pressures with the outbreak of fifth wave of the epidemic.
  • The introduction of global minimum tax rate in 2023 by Organisation for Economic Co operation and Development may help rising revenue from profits tax.

Rating System

  • Proposed to introduce a progressive rating system for domestic properties (excluding public rental housing) to reflect the “affordable users pay” principle. The proposed progressive rating system for domestic properties will be introduced in the 2nd phase in 2024/25.
  • Proposed to grant the future rate concessions for domestic properties only to those eligible owners who are natural persons for one domestic property under their name. The proposal for rate concession for domestic properties will be rolled out in the 1st phase in 2023/24.

New International Tax Standards

  • Planned to submit a legislative proposal to the Legislative Council in the second half of 2022 to implement the global minimum tax rate and other relevant requirements based on the international consensus.
  • Consider to introduce a domestic minimum top up tax to the large multinational enterprise starting from the year of assessment 2024/25 ensuring that their effective tax rates met the global minimum effective tax rate of 15% in order to safeguard the taxing right of Hong Kong.
Detailed version of our summary
Please visit [ pdf version ] for detailed version of our summary on the Hong Kong 2022-23 Budget.
Further Information
The above information is mainly extracted from the website of the “The Hong Kong 2022-23 Budget”. Please visit https://www.budget.gov.hk/2022/eng/speech.html or contact our Tax Service Department (email: tax@atrixbiz.com) for further details.

Reference

The Hong Kong 2022-23 Budget
[ 23rd February 2022 ]

Corporate Tax
Hong Kong adopts territorial tax system. Profits tax shall be charged on every person carrying on trade, profession or business in Hong Kong in respect of the profits arising in or derived from Hong Kong from such trade, profession or business regardless of the nationality, domicile or residence of a person.
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Individual Tax
Hong Kong salaries tax is charged on every individual in respect of his/her income arising in or derived from any office, employment or any pension in Hong Kong. All income from a “Hong Kong sourced employment” is liable to tax irrespective of the locations for rendering the services, subject only to certain statutory exemptions.
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Tax Investigation and Filed Audit Support
Hong Kong upholds simple tax system and its tax rate is one of the lowest in the world which requires a high degree of compliance of taxpayers. In order to protect government revenue, the IRD will review the submitted tax returns periodically by way of field audit and investigation.
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Tax Policies in Hong Kong
Double Taxation Relief / Withholding Taxs / Advance Ruling in Hong Kong
/ Common Reporting Standard ("CRS") and Automatic Exchange of Financial Account Information ("AEOI")
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