On 23 February, the Financial Secretary Mr. Chan presented the 2022-23 Budget, pledging more than HKD54 billion to support the anti-epidemic work for Hong Kong businesses and individuals as the city grapples with its fifth and biggest wave of the pandemic. This year’s budget will continue to adopt an expansionary fiscal policy with initiatives mainly focusing on four areas:
- Supporting an all-out effort to win the fight against the epidemic;
- Relieving the hardship of Hong Kong people & SME’s;
- Rendering support to the struggling economy and fostering the post-epidemic economic revival;
- Investing in the future by planning ahead for the medium- and long-term development of Hong Kong’s economy.
A surplus of HKD18.9 billion is projected for 2021-22 – against the original forecast of an HKD101.6 billion deficit – due to better-than-expected revenue from profits tax and land sales, coupled with falling expenditure. Fiscal reserves are expected to reach HKD946.7 billion by the end of March 2022. Moreover, regarding the headline inflation rate and the underlying inflation rate, Mr. Chan forecasts it to be 2.1% and 2% respectively this year.
Members will be glad to read that all taxes until $10,000 are free: to provide support to members of the public and for easing the operating pressure on businesses, final profits tax, salaries tax, and tax under personal assessment will be reduced by 100% for 2021/2022, subject to a ceiling of $10,000.
Moreover, Mr. Chan proposed to introduce a tax deduction for domestic rental expenses from the year of assessment 2022/23 (next year). Taxpayers liable to salaries tax or tax charged under personal assessment who do not own any domestic property can claim a deduction for the rent paid by him/her or his/her spouse as the tenant. The annual ceiling of the deduction is $100,000.
To relieve people’s hardship, an extra half-month allowance of standard CSSA payments, Old Age Allowance, Old Age Living Allowance, or Disability Allowance will be provided. Moreover, 30,000 time-limited jobs will be created through the $6.6 billion earmarked in the Anti-epidemic Fund.
Do you travel a lot on public transport? Good news: the threshold for the public transport fare subsidy scheme will be lowered from $400 to $200 from May to October this year.
To support enterprises, Mr. Chan will implement rental Enforcement Moratorium to protect tenants of specific sectors. Moreover, he will extend the application of a Special 100% Loan Guarantee for enterprises to end-June 2023 and increase the maximum loan amount to 27 months of employee wages and rents with the loan ceiling raised to $9 million.
To boost market sentiment, stimulate local consumption, and speed up economic recovery, Mr. Chan will implement a new round of consumption voucher schemes, under which electronic consumption vouchers with a total value of $10,000 will be disbursed by instalments to each eligible Hong Kong permanent resident and new arrival aged 18 or above (i.e., new immigrants). The voucher will be disbursed in two amounts of $5,000, starting from April.
To read the whole Hong Kong budget, click here.
Would you like to attend a webinar by Mr. Chan during which he further explains his budget to businesses? That’s possible: on 23 March starting at 12.30pm, more information here (click).