On 22 February, 2023, the Finance Secretary of the Hong Kong Special Administrative Region, Mr. Paul Chan, announced the 2023/24 Fiscal Policy. "Challenges nurture greater creativity and capability. We all need to keep striving for a better future for Hong Kong, contributing to its success. "
The most important points of the fiscal/financial policy that will enter into force on 1 April, 2023 are the following: 1. Profits Tax 2022/23 Profits Tax is regulated in Section 14 of the Inland Revenue Ordinance ("IRO"). The tax rate on the first HKD2 million remains at 8.25%, and from that amount the base rate of 16.5% will continue. This is with the intention of continuing to support SMEs. Profits Tax for 2022/23 will have a 100% reduction on the amount to be paid subject to a ceiling of HKD6,000 for each case.
2. Rates for non-domestic properties (for commercial use) The government will provide rates concession for non-domestic properties for the first two quarters of 2023/24, subject to a ceiling of HKD1,000 per quarter for each rateable property.
3. Business Registration Fee and Levy
The levy on the Business Registration Certificate remains at HKD150, while the registration fee will resume to normal as HKD2,000.
4. Salary Tax and Personal Income 2022/23 Salary Tax is regulated under section 8 of the IRO. This tax is levied on salary and/or pension income earned in or from Hong Kong. Individuals are taxed at a progressive rate on their net income, that is, after deductions, starting at 2% and ending at 17%; or at a standard rate of 15%, whichever is lower. For 2022/23 there will be a 100% reduction on the amount to be paid, subject to a ceiling of HKD6,000 for each case. The following table summarizes the annual deductions in HKD:
5. Support for SMEs
To encourage Hong Kong companies to expand their businesses into the mainland market, the government will spend HKD500 million into the existing Dedicated Fund on Branding, Upgrading and Domestic Sales Fund, known as the “BUD Fund”. Another HKD100 million will be allocated in the next five years to the Hong Kong Productivity Council to help SMEs apply for government subsidies.
Besides, SMEs will continue to have access to fresh funding, with a total of HKD230 billion from the SME Financing Guarantee Scheme. Such scheme is based on a guarantee given by the government to offer low-interest concessional loan to SMEs.
6. Proposed capital gain tax and "Patent Box" tax incentive
To facilitate business expansion and restructure through disposal of equity interests, enhanced proposal will be revealed in mid-March on guidelines that indicate whether companies making gains from selling equity interests are subject to tax.
In addition, to provide tax concessions for profits sourced in Hong Kong from qualifying patents generated through research and development activities, the government will introduce a "Patent Box" tax incentive.
7. New Capital Immigration Scheme
To attract talents, the Capital Investment Entrant Scheme will be relaunched. Applicants must make investments of a certain amount in the local asset market, excluding property. Upon approval, they may live and pursue development in Hong Kong.
8. Consumption Vouchers To boost domestic consumption, each Hong Kong permanent residents and new immigrants aged 18 or above will be given HKD5,000 in consumption vouchers in two instalments. The first instalment of HKD3,000 is expected to be handed out in April, and the second tranche will be given in mid-2023.
Non-Hong Kong residents who come to live in the city through different admission schemes, or to study, will receive vouchers of HKD2,500.
9. Funding for creative industries
To support the development of creative industries and encourage more cross-sectoral collaboration, an additional HKD500 million will be injected by the government into the CreateSmart Initiative.
If you require more information about the The Budget 2023/24 of the Government of the Hong Kong Special Administrative Region and other tax issues in the region, do not hesitate to contact us at +852 2528 4999 or by email at: info@la-nao.com Sincerely, La Nao Consulting
