Hong Kong Budget for Fiscal Year 2021-22 during the times of Uncertainties
On 24 February 2021, the Financial Secretary of the Hong Kong Special Administrative Region, Mr. Paul Chan Mo-po, delivered the 2021-22 Budget Speech.
With the impacts of China-US tension, social incident, COVID-19 pandemic, Hong Kong is faced with a lackluster economy and a deteriorated labour market. Hong Kong expects a record deficit of HK$257.6 billion and HK$101.6 billion for 2020-2021 and 2021-22 respectively, meaning that there would be deficit for four consecutive years. The Financial Secretary’s 2021-22 budget is focused on supporting enterprises, supporting employment and relieving people’s hardship.
2021-22 Budget Highlights
We summarize the 2021-22 budget’s key highlights relating to salaries tax, profits tax, measures to smoothen livelihoods, support enterprises and achieve diversified economy, as follows:
a)HK$5,000 electronic consumption vouchers in instalments to Hong Kong permanent residents and new arrivals aged 18 or above
b) Salaries Tax and tax under personal assessment for 2020-21 will be reduced by 100%, subject to a ceiling of HK$10,000 (2019-20: HK$20,000). The reduction will be reflected in the final tax payable for the year of assessment 2020-21
c) The rate of Stamp Duty on Stock Transfers will be raised from the current 0.1% to 0.13% of the consideration or value of each transaction payable by buyers and sellers respectively.
a) Profits Tax for 2020-21 will be reduced by 100%, subject to a ceiling of HK$10,000 (2019-20: HK$20,000). The reduction will be reflected in the final tax payable for the year of assessment 2020-21
b) Concessionary low-interest loan
c) Extension six months of the Pre-approved Principal Payment Holiday Scheme
d) Waive rates for non-domestic properties for 2021-22, subject to a ceiling of HK$5,000 per quarter in first two quarters and HK$2,000 per quarter for remaining two quarters
Continue to implement relief measures announced last year
e) Waive the business registration fees for 2021-22
f) Water and sewage charges of non-domestic households: waive 75% of charges for every month, subject to a monthly cap of HK$20,000 and HK$12,500 respectively
Achieve diversified economy, Innovation and technology
a) Issue no less than $24 billion of Silver Bond and no less than $15 billion of iBond this year. Lower the eligible age for Silver Bond subscription from 65 to 60
b) Issue green bonds totalling $175.5 billion within the next 5 years, and plan to issue retail green bonds
c) Roll out Green and Sustainable Finance Grant Scheme to subsidise expenses on bond issuance and external review services
d) Strive for the launch of Southbound Trading of Bond Connect within this year, and enhance the domestic Central Moneymarkets Unit
e) Provide subsidy for Real Estate Investment Trusts to list in Hong Kong
f) Launch a Pilot Insurance-linked Securities Grant Scheme to subsidise issuance cost
g) Provide subsidy for Open-ended Fund Companies to set up in or re-domicile to Hong Kong
h) Review tax arrangements relevant to family office business
i) Earmark over $200 million to roll out “Knowing More About IT” Programme, subsidise primary schools to enhance students’ interests and knowledge in I&T and their applications through extra-curricular activities
j) Regularise the pilot scheme which subsidises students studying science and technology in local universities to enrol in short-term I&T related internships
k) Inject $9.5 billion into the Innovation and Technology Fund by two yearly instalments
l) Hong Kong Monetary Authority to consider enhancing its Fintech Supervisory Sandbox to reduce time for launching innovative financial products in the market
m) Press ahead with the development of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop
n) Continue to implement the Science Park expansion and Cyberport 5 development
o) Continue to support the development of 5G networks and applications
p) Commence progressively the operation of the first batch of about 20 R&D laboratories under the “InnoHK Research Clusters” in the first quarter of this year
CW welcome the Budget’s cautious and targeted measures, which pave the way to foster post-pandemic economic resilience and betterment of livelihood.
*For 2020-21, the profits tax is proposed to be reduced by 100%, subject to a ceiling of HK$10,000. (2019-20: HK$20,000)
- Salaries tax is charged at the lower of net chargeable income (Total Income – Deductions – Allowances) at progressive rates or net total income (Assessable Income – Deductions) at standard rate.
- Standard rate remains the same at 15%.
- Progressive rates are as follows:
*For 2020-21, the salaries tax and tax under personal assessment are proposed to be reduced by 100%, subject to a ceiling of HK$10,000. (2019-20: HK$20,000)
The standard rate (for non-corporate owners) remains at 15% for 2021-22.
Written by May Tung, Tax Advisory Services, CW CPA