Overview
The Financial Secretary, Mr. Paul Chan, delivered the 2023/24 Budget Speech on
22nd February 2023. The forecasted deficit of about $139.8 billion for 2022/23 is
higher than the original estimate of about $56 billion. Then, the fiscal reserves estimation decreases to $762.9 billion, equivalent to 12 months of government expenditure.
Where are we NOW?
Hong Kong is at the early recovery stage. And members of the public as well as a large number of enterprises are still weighed down by tremendous pressure and require support. Meanwhile, in the face of intense competition and imminent development needs. Hong Kong has to fully and speedily press ahead with high-quality economic development. So, the budget will support planning and a front-loaded approach.
Budget Highlights of Key Measures
Support enterprises and the general public
- Reduce profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a ceiling of $6,000.
- Provide rates concession for domestic and non-domestic properties for the first two quarters of 2023/24, subject to a ceiling of $1,000 per quarter for each rateable property.
- Increase tax deduction for the Mandatory Provident Fund voluntary contributions made by employers for their employees aged 65 or above, from the current 100% to 200% in respect of such expenditure.
- Increase the basic child allowance and the additional child allowance for each child born during the year of assessment from $120,000 to $130,000 starting from the year of assessment 2023/24.
- Adjust computation of stamp duty to ease the burden on ordinary families of purchasing their first residential properties, particularly small and medium residential units. For example, a property worth of $8 million may save $60,000 in stamp duty.
Attract investments and promote high quality growth
- Conduct consultation and submit legislative proposals in 2023/24 to introduce a mechanism to facilitate companies domiciled overseas, particularly enterprises with a business focus in the Asia Pacific region, for re-domiciliation to Hong Kong, so that these companies may utilise our favourable business environment and professional services.
- Introduced legislative amendments into the Legislative Council (LegCo) in December 2022 to provide profits tax exemption for qualifying transactions of family-owned investment holding vehicles managed by single family offices in Hong Kong. Upon passage of the proposal, the tax concession arrangements will be applicable to any years of assessment on or after 1 April 2022.
- Enhance the listing rules in order to strike a balance between market development and regulatory needs, including relevant arrangement concerning share buy-backs by issuers.
- Work with regulators to refine the regulatory measures and tax arrangements for the asset and wealth management sector as well as to review the existing tax concession
- measures applicable to funds and carried interest.
- Introduce a bill into the LegCo in the fourth quarter of 2023 to enhance the aircraft leasing preferential tax regime, striving to establish Hong Kong as an aircraft leasing and services hub.
- Introduce a ‘patent box’ tax incentive to encourage the information and technology sector to create more patented inventions.
Tax policy and other measure to increase revenue
- Keep profits tax and salaries tax rates unchanged.
- Impose an annual special football betting duty of $2.4 billion on the Hong Kong Jockey Club for five years starting from 2023/24.
- Introduce a progressive rating system for domestic properties in 2024/25 (announced in the 2022/23 budget).
- Plan to issue no less than $50 billion of Silver Bond and $15 billion of retail green bonds in the next financial year, so as to facilitate market development and at the same time offer members of the public investment options with steady returns.
- Further expand the scope of the Government Green Bond Programme to cover sustainable finance projects, and set up an Infrastructure Bond Scheme to better manage the cash flow needs of major infrastructure projects.
- Plan to apply the global minimum effective tax rate on large multinational enterprise (MNE) groups and implement the domestic minimum top-up tax starting from 2025 onwards.
- Put forward an enhancement proposal in mid-March to provide clearer guidelines on whether onshore gains on disposal of equity interests are subject to tax.
For further information, please contact us.
You may want to read: 2022-2023 HONG KONG BUDGET HIGHLIGHTS