On 25 March 2022, CW held a live streaming session highlighting the Hong Kong 2022-23 Budget for Latin American companies. Our colleagues Delilah Li (Senior Manager, Greater China), Victor Herrera (Latam Focus), and Kemelly Vera (Brazil Focus) hosted the live session.
Below are the key takeaways from the Hong Kong 2022-23 Budget highlighted in our live session.
- To reduce profits tax for the year of assessment 2021/22 by 100 percent, subject to a ceiling of $10,000.
- Salaries tax and tax under personal assessment for the year of assessment 2021/22 are reduced by 100 percent, subject to a ceiling of $10,000.
- Tax deduction for domestic rental expenses starting from the year of assessment 2022/23 to ease the burden of renting a private property on taxpayers liable to salaries tax and tax under personal assessment who are not owners of domestic properties, subject to a deduction ceiling of $100,000 for a year of assessment.
- Total funding of $135 million will be allocated to the Hong Kong Trade Development Council (HKTDC) over the next three years to introduce the Support Scheme for Pursuing Development in the Mainland.
- Latin American companies can explore markets and capture business opportunities through the Hong Kong trade platform. For example, Hong Kong has the Convention and Exhibition Industry Subsidy Scheme, which is now being extended to the end of December 2022. This scheme subsidizes exhibitors and major conference participants 50% of the participation fee at events organized by HKTDC, subject to a cap of HK$10,000 for each booth and HK$100,000 for each fair.
Greater Bay Area (GBA)
- Hong Kong has a Future Fund to pursue higher investment returns for the city’s fiscal reserves, which is considered a de facto Sovereign Wealth Fund. Under this Future Fund, Hong Kong announced the setting up of Hong Kong Growth Portfolio two years ago, using part of the Future Fund for investment in projects that are strategically beneficial to Hong Kong’s economy.
- There will be a GBA Investment Fund in this year’s budget that will specifically focus on investment opportunities in GBA under the Hong Kong Growth Portfolio. HK$ 5 billion will be allocated to this GBA Investment Fund.
- There will be a plan to develop sea-air cargo trans-shipment between the Hong Kong International Airport and the rest of the GBA. Under this plan, Hong Kong will set up an upstream Logistics Park in Dongguan and an airside intermodal cargo handling facility at the HKIA. And this will allow export cargo from the Mainland to complete security screening in advance and then be transported seamlessly to Hong Kong, then to all overseas destinations without the need to undergo further security screening. Similarly, international cargo can also be imported into the Mainland through the reverse process.
Innovation and Technology
- The policies of the Hong Kong government are focused on promoting innovation and technology and creating a business ecosystem that is favorable for startups. In Hong Kong, the startups are supported by a strong network of experienced angels and venture capitalists and a thriving community of startups for networking events, seminars, and associations with other commercial advantages.
- Under Hong Kong Growth Portfolio, there will be increased funding of up to $5 billion that will be used to set up a new investment fund called Strategic Tech Fund.
- The Hong Kong Science and Technology Park and Cyberport will be invited to identify technology enterprises that are of strategic value to Hong Kong and investment opportunities conducive to enriching the I&T ecosystem.
- Currently, biotechnology, artificial intelligence, smart city, and financial technologies are identified as the four key areas for Hong Kong’s innovation and technology industry.
- Besides having a proven and marketable concept, Latin American startups need to think about how their technology can bring economic and social benefits to Hong Kong to benefit from the funding programs available in Hong Kong.