HONG KONG: BUDGET HIGHLIGHTS 2023-24

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.

budget

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

HONG KONG ROLLS OUT CONSUMPTION VOUCHER 2023

Consumption Voucher

Hong Kong will roll out another round of electronic consumption voucher 2023 that worth HK$5,000 again to permanent adult. The payment will separate in two instalments. 

CONSUMPTION VOUCHER 2023

What about Hong Kong Resident?

If you are coming to Hong Kong on different admission schemes, or overseas students studying in Hong Kong. You still can receive the voucher in half value at HK$2,500. 

When can you receive the consumption voucher 2023?

The first instalment of HK$3,000 or HK$1,500 rolled out on 16th April. While the second instalment will disburse on 16th July.

How to receive your consumption vouchers 2023?

You are no need to re-register if you have successfully registered under the 2022 Consumption Voucher Scheme. The payment will directly to your previously registered stored value facility accounts.

What payment gateway can you use?

AlipayHK / BoC Pay / PayMe from HSBC / Tap & Go / WeChat Pay HK / Octopus

For further information, please contact us.

You may want to read: 2022-2023 HONG KONG BUDGET HIGHLIGHTS

HONG KONG: LODGEMENT OF 2022/23 PROFIT TAX RETURNS

The profits tax filing season sent with the bulk issuance of the 2023/23 profit tax returns on 3rd April 2023.

Profit Tax Returns

Dates for filing the 2022/23 Profit Tax Returns

If you would like for extension for tax filing, you have to send your application within 1 month from the date of issue. The extended due dates for filing the 2022/23 profits tax returns under the Block Extension Scheme (i.e. for taxpayers with a tax representative) are as follows:

Accounting Date CodeExtended Due DateFurther Extended Due Date for Semi-electronic / electronic filing
“N” Code (1 Apr 2022 – 30 Nov 2022)3 May 2023
(No Extension)		3 Jun 2023
“D”Code
(1 Dec 2022 – 31 Dec 2022)		15 August 202315 September 2023
“M” Code (1 Jan 2023 – 31 Mar 2023)15 November 202315 December 2023

Newly Registered Business

For newly setup companies, the first Profit Tax Return will issue around 18-month after the date of commencement of a new business. However, where circumstances warrant, the Department may issue a Provisional Profits Tax Return for completion as an earlier date.

For the Tax Return filing, the business owners have to submit the first returns with 3 months. If they failed to reply within 3 months from the date of issue. Then late penalties will be applied.

What’s NEW?

Previously, the small corporations and business with gross income not exceeding $2-million was no need to submit supporting document. Started from 1st April 2023, the small corporations need to provide furnishing supporting documents when filing.

Schedule from Inland Revenue Department to Hong Kong Limited Companies

DateEvent
3 & 4 April 2023Bulk issue of Profits Tax returns
3 May 2023Deadline for submitting list of new clients for which your firm was appointed as tax representative on or after 22 February 2023 with “D” & “M” code returns on “Schedule” basis
3 May 2023Deadline for submitting list of taxpayers (on “Schedule” basis) who have : ceased to be your clients for 2022/23 final assessment purposes changed their accounting dates
3 May 2023Due date for “N” code returns – “active” files
4 May 2023Due date for “N” code returns
1 Jun 2023Deadline for notifying changes of clients’ details occurring between 3 and 31 May 2023 on “Schedule” basis
15 Aug 2023Extended due date for “D” code returns
1 Nov 2023Deadline for submitting further extension list for “M” code current year loss cases (Exceptionally, requests in individual cases may be lodged on or before 15 November 2023)
15 Nov 2023Extended due date for “M” code returns
31 Jan 2024Final extended due date for “M” code current year loss cases filed electronically or not

Schedule from Inland Revenue Department to Individual Taxpayers in Hong Kong

DateEvent
2 May 2023Bulk issue of Tax Return – Individuals
2 Jun 2023Deadline for submitting list of clients whom you have commenced or ceased to represent which the Department had not been notified prior to 10 March 2023
2 Jun 2023Due date for unrepresented cases not involving sole-proprietorship business
3 Jul 2023Extended due date for represented cases not involving sole-proprietorship business
2 Aug 2023Due date for unrepresented cases involving sole-proprietorship business
3 Oct 2023Extended due date for represented cases involving sole-proprietorship business

For further information, please contact us.

You may want to read: What to do when I receive a Profit Tax Return?

HONG KONG: THE BUD FUND – EASY BUD

What is BUD FUND?

Hong Kong Government set up a “Dedicated Fund on Branding, Upgrading and Domestic Sales” (“the BUD Fund”) in June 2012. The purposes are assisting enterprises in exploring and developing the market via:

  1. Developing brands
  2. Upgrading and restructuring the operation
  3. Promoting domestic sales in the market

The Government extended the geographical coverage of the BUD Fund in August 2018 to also include the Association of Southeast Asian Nation (“ASEAN”) markets.  A further expansion of the geographical coverage was implemented in January 2020 to cover other economies with which Hong Kong had signed Free Trade Agreements (“FTAs”) to assist enterprises in taking the economic opportunities.

The Government launched enhancement measures by phases in July 2021, including extending the geographical coverage of the Fund to include all economies with which Hong Kong has signed Investment Promotion and Protection Agreements (“IPPAs“).

To strengthen the support to enterprises in enhancing their competitiveness and developing diversified markets, the cumulative funding ceiling per enterprise under the BUD Fund has been increased to HK$7,000,000 and the maximum number of approved projects per enterprise has been increased to 70 in November 2022.

BUD Fund
Image of two young businessmen discussing new project in office

What’s New?

The Government launched “Easy BUD” on 16 Jun 2023 to facilitate SMEs in preparing applications and implementing projects. The processing time of “Easy BUD” is shortened with simplified application and streamlined vetting arrangements. The funding ceiling capped at HK$100,000 per “Easy BUD” application.

The BUD Fund – Easy BUD

To expedite the processing of applications, so as to enable more SMEs to make use of the funding to develop their business. The Government launched “Easy BUD” under the “BUD Fund”. The application form and the requirements for supporting documents have simplified. The vetting arrangements have also been streamlined with the processing time of “Easy BUD” applications halved to within 30 working days.

Programme Outline

Eligibility

Not-listed enterprises registered under the Business Registration Ordinance (Chapter 310), with “Substantive business Operations” in Hong Kong

Geographical Scope

Mainland and other economies with which Hong Kong has signed Free Trade Agreement and/or Investment Promotion and Protection Agreements.

Funding Ceiling per Approved Project

Maximum funding amount is HK$100,000. Funding on 50:50 matching basis.

Project Commencement

The soonest the next day after the application submission

Project Duration

Maximum of 12 months

Application Period

Application is open all year round. Each enterprise can submit ONE application every 6 months.

Project Measures

  • Advertisement
  • Participation in exhibitions and related expenses
  • Design and production of promotional materials
  • Patent/trademark registration
  • Testing and certification
  • Mobile application of promotional purpose
  • Development or enhancement of company website

For further information, please contact us.

You may want to read: Hong Kong BUD Fund

HONG KONG: FULLY VIRTUAL GENERAL MEETINGS FOR HONG KONG LIMITED COMPANIES

What’s New?

Starting from 28th April 2023, the Companies (Amendment) Ordinance 2023 (the “Amendment Ordinance”) came into operation in Hong Kong. The Companies Registry (CR)accepts holding an annual general meeting (AGM) or general meeting (GM) in virtual methods. members of Hong Kong Companies will no longer need to show up in person to attend the general meetings.

HONG KONG FULLY VIRTUAL GENERAL MEETINGS

What is the difference?

Prior to 28th April 2023, CR did not accept holding AGMs or GMs virtually. Furthermore, section 584 of the Companies Ordinance (CO) only stated that a company may hold a GM at two or more places using any technology. The venue must enable the members of the company who are not together at the same place to listen, speak and vote at the meeting.

The key changes/clarification in the Amendment Ordinance: –

  1. “Virtual meeting technology” means a technology that allows a person to listen, speak and vote at a meeting without being physically present at the meeting.
  2. A notice of a general meeting to members (or on a website) must specify, the physical venue of the meeting or the virtual meeting technology to be used for holding the meeting, or both.
  3. A notice may specify the virtual meeting technology to be used for holding the meeting unless the company’s AOA expressly preclude the holding of a general meeting by using virtual meeting technology or require a general meeting to be held only at a physical venue
  4. A company may hold a fully physical, a fully virtual, or a partially physical and virtual meeting.
  5. When a general meeting of a company is held at two or more physical venues, the company must use any technology that allows the members of the company who are not together at the same physical venue to listen, speak and vote at the meeting regardless of whether virtual meeting technology is also used for holding the meeting.
  6. A person who attends a general meeting by using the virtual meeting technology specified in the notice of the meeting is to be regarded as being present.

For further information, please contact us.

You may want to read: Holding Annual General Meeting during COVID-19

SPECIFIED PERSONS FOR OBTAINING PROTECTED INFORMATION

To enhance protection of sensitive personal information, while keeping up the transparency and usefulness of the Register. The Companies Ordinance (Cap. 622) is carrying out in 3 phrases from August 2021 through end of 2023. Only Specified person can access the protected information.

protected information

Where are we now?

The Registry of Hong Kong is now preparing for the implementation of Phase 2. Furthermore, the New Inspection Regime on 24th October 2022. Under Phase 2, the Protected Information on the Index of Directors will be replaced by correspondence address and partial IDNs for public inspection. So, the public cannot access the protected information. Only the “Specified Persons” can access via a One-time application or via a special account.

Who are the Specified Persons?

  1. Certified public accountant (Practising)
  2. Designated Non-Financial Business and Professions”(DNFBP) including accounting professional
    • A certified public accountant or a certified public accountant (practicing), as defined by section 2(1) of the Professional Accountant Ordinance;
    • A corporate practice as defined by section 2(1) of the Professional Accountants Ordinance; or
    • A firm of certified public accountants (Practising) registered under Part IV of the Professional Accountant Ordinance.

Who needs a special account?

For those specific persons who require routine access to Protected information on the Register for the performance of functions specified in section 12(11) of the Regulation, including Certified Auditors and Company Secretaries.

Who can apply for the special accounts?

  • Only a natural person who is a specified person can apply for disclosure of Protected Information through a Special Account.
  • If the specified person is not a natural person, such as a corporate practice or a firm of certified public accountants (practicing). They can submit their application for disclosure of Protected Information via the Authorised Representative’s Special Account.

For further information, please contact us.

You may want to read: NEW INSPECTION REGIME FOR THE COMPANIES REGISTER

IR56 FORMS DEADLINE EXTENDED TO 1 JUNE 2022

The Inland Revenue Department (IRD) on 1st April 2022 issued about 220,000 IR56 forms, 120,000 property tax returns and 300,000 employer’s returns for the year of assessment 2021-22. Thereafter, about 2.48 million tax returns for individuals will be issued on June 1.

Don’t forget to file your IR56 forms

Hong Kong Taxpayers have to file their returns within one month from the date of issue of the relevant returns. Nevertheless, for employer’s returns, the deadline for filing is extended to June 1, 2022. In fact, for cases with tax representatives appointed, the deadlines for filing returns are set out in the Block Extension Letter posted on the department’s website.

How to file?

IRD encourages individuals to file the tax returns through eTAX electronic services. The eTAX services permit individuals to use the Government’s “iAM Smart” digital services to log in and sign the tax returns. If you are going to file your tax returns by posted. No matter you are individuals or employers, you have to pay sufficient postage for your returns. Otherwise, underpaid mail items will not be accepted.

For further information, please contact us.

You may want to read: What to do when I receive a Profit Tax Return?

COMPANIES ORDINANCE AND BUSINESS REGISTRATION ORDINANCE HIGHLIGHTS

Hong Kong Local registered companies must comply with the requirements of the Companies Ordinance (Chapter 622, Law of Hong Kong). And deliver statutory returns to the Registrar of Companies within prescribed time periods including:

  1. Section 658 requires a company to deliver a notice of change of address of registered office in Form NR1 within 15 days after the change.
  2. Section 645 & 652 states that any change in company’s director, company secretary and/or in the particulars. The company must, within 15 days after the change, deliver a notice of change in Form ND2A and/or Form ND2B.
  3. Sections 662 & 664 states that a company must deliver an annual return Form NAR1 together with annual registration fee
    • Private company: within 42 days after the anniversary of the date of incorporation of the company every year;
    • Public company: in respect of every financial year, within 42 days after the company’s return. The company’s return date is the date that is 6 months after the end of the company’s accounting reference period. The return must be accompanied by certified true copies of the company’s financial statements, directors’ report and auditors’ report;
    • Company Limited by Guarantee: in respect of every financial year, within 42 days after the company’s return. The company’s return date is the date that is 9 months after the end of company’s accounting reference period. The return must be accompanied by certified true copies of the company’s financial statements, directors’ report and auditors’ report.
Companies Ordinance

What you have to do?

Business registration and its renewal are statutory requirements under the Business Registration (Chapter 310 of the Laws of Hong Kong) administered by the Business Registration Office of the Inland Revenue Department. You still need to submit your annual return together with the annual registration fee to the Registrar of Companies within the prescribed time period. If you fail to file your annual return on time, then it will cause a substantially higher registration fee.

What is the consequence if failure to comply to the Companies Ordinance?

If a company fails to comply with the requirements of the Companies Ordinance, the company and every responsible person of the company. Including every director, company secretary and manager of the company are liable to prosecution. And if convicted, default fines.

For further information, please contact us.

You may want to read: Companies Ordinance 2018: Keeping of Significant Controllers Register