Budget Address 2020/21 of the Government of the Hong Kong Special Administrative Region

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On February 26th of 2020, the Financial Secretary of the Hong Kong Special Administrative Region, Mr. Paul Chang, announced the Budget for the year 2020/21. 

 

One of the major highlights is that there will be HKD10,000 cash payout to each Hong Kong permanent resident aged 18 or above, with a view to encouraging and boosting local consumption and relieving people's financial burden.   The most relevant aspects of the Budget that will take effect from April 1st of 2020 are the following:

 

1.         Profits Tax

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Profits Tax is governed in Section 14 of the Inland Revenue Ordinance ("IRO"). The Profits Tax rate for the first HKD2 million is maintained at an 8.25% rate and thereafter at the standard rate of 16.5%. The purpose is to continue to support SMEs.  Profits Tax for 2019/20 will be reduced by 100% of the payable amount subject to a ceiling of HKD20,000 per case. 

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2.         Government Fees

 

For the period 2020/21, the government fees of the Business Registration Certificate will be maintained at HKD250 (2018/19 at HKD2,250).  In addition, the registration fees for Company Annual Returns of HKD105 (except for late delivery) will be waived for the periods 2020/21 and 2021/22.  

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3.         Rates for Non-domestic Properties 

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For the non-domestic properties for 4 quarters of 2020/21, the rates will be waived subject to a ceiling of HKD5,000 per quarter in the first two quarters and a ceiling of HKD1,500 per quarter in the remaining two quarters for each rateable non-domestic property.

 

4.         Concessionary Low-interest Loan

 

The Government will introduce a concessionary low-interest loan under the SME Financing Guarantee Scheme, under which 100% guarantee will be provided by the Government.  The application period will last for six months.  The maximum amount for loan for eligible enterprises is based on their salary and rental expenditures for six months subject to a ceiling of HKD2 million.

5.         Salaries Tax and Personal Assessment

The Salaries Tax is governed in Section 8 of the IRO. Any income perceived from employment and/or pension arising in or derived from Hong Kong will be subject to Salaries Tax.

Individuals are taxed at a progressive tax rate on their net chargeable income (i.e. assessable income after deductions and allowances) starting at 2% and ending at 17%; or at a standard tax rate of 15%, whichever is lower.

Salaries Tax for 2019/20 will be reduced by 100% of the payable amount subject to a ceiling of HKD20,000 per case. 

The following table summarizes the annual allowances in HKD: