Hong Kong Budget 2023–2024: Highlights For Businesses

Hong Kong Budget 2023-2024 was delivered on 22nd February 2023, to protect Hong Kong’s prosperity while improving people’s well-being. This year’s budget’s central theme is “Leaping Forward Steadily, Together We Bolster Prosperity under Our New Vision”.

Some measures introduced include relief in profits tax, schemes to support the SME sector, continuous efforts to attract enterprises, and boosting trade.

With such offerings and more, Hong Kong’s commitment to supporting its entrepreneurial community has never been more evident!

One-off tax reduction to support individuals and enterprises

Profit tax

The Financial Secretary has proposed a one-off reduction of profits tax for the year of assessment (YA) 2022-23 by 100%, subject to a ceiling of HK$6,000 per case.

Though the upcoming reduction will be visible in the final tax due for YA 2022-23, it’s important to note that this won’t be applied to the provisional payments scheduled for the same year. As such, taxpayers must still make sure their temporary tax is paid on time – regardless of these proposed reductions.

Before the implementation of this measure, taxpayers should file their 2022-23 profits tax returns as usual. Upon enactment of the relevant legislation, The IRD will then compute any applicable reduction and make a reassessment if necessary. No applications or inquiries to the IRD are required for taxpayers.

No alterations have been suggested to profits tax rates. Thus, the two-tiered rates will remain stable for corporations (8.25% & 16.5%) and unincorporated businesses (7.5% & 15%).

Salaries tax

A one-off salaries tax reduction has been put into motion to provide financial aid to those coping with the pandemic. Through this measure, individual taxpayers and each married couple will receive a 100% waiver of salaries tax and personal assessment taxes for YA 2022/23, capped at HK$6,000.

The proposed tax reduction will not apply to property tax and the provisional tax for YA 2023-24.

For more details on other one-off measures for individuals and businesses, click here.

Other business support policies

Attracting foreign companies to re-domicile in Hong Kong

The government is introducing a system to facilitate the re-domiciliation process of overseas companies in Hong Kong.

This initiative will empower these companies to expand operations by taking advantage of the favorable business climate and professional services available in Hong Kong. To ensure this measure is fully supported, the government plans to conduct consultations and submit legislative proposals in 2023-24.

Supporting SMEs and Start-ups

The Budget 2023-24 offers SMEs additional time to settle and gain stability by extending the application period of all guarantee products under the SME Financing Guarantee Scheme (SFGS) until March 2024. By doing so, businesses are given more space to adapt and become firmly grounded financially.

Boosting trade

Taking advantage of its well-known status as a leading trading hub, Hong Kong is determined to build upon and leverage this strength to drive economic growth for years to come.

To broaden the trading industry, the nation will expand its network of free trade agreements (FTAs) and investment contracts (IAs), providing access to a greater number of developing markets.

To further aid businesses, the government has supplied an extra HK$550 million to the Hong Kong Trade Development Council to assist enterprises in opening up markets. A separate sum of HK$100 million was allocated to the Hong Kong Productivity Council towards aiding SMEs in the application process for governmental subsidies.

New international tax standards

In line with the international tax reform proposals drawn up by the Organization for Economic Cooperation and Development (OECD) to address base erosion and profit shifting (abbreviated as BEPS 2.0), the Hong Kong government indicated that it would implement a 15% global minimum effective tax rate on large MNE groups, starting from 2025 onwards. Analysts anticipate that this proposal could inject up to HK$15 billion in tax revenue each year for Hong Kong.

Conclusion

Before the Budget 2023-24 initiatives can take effect, they must first go through all necessary legislative procedures, which will likely be finalized in April 2023. Therefore, it is highly recommended that any individuals or companies interested in this topic pay close attention to the updates and changes forthcoming over the upcoming months.

Visit this site for comprehensive details on the Hong Kong Budget 2023/24.