Hong Kong’s financial secretary, Paul Chan, proposed in his recent 2020/21 Hong Kong budget speech various relief measures that could cause the government a deficit of up to HK$139 billion. Since the second half of 2019, the Hong Kong economy has taken a big hit due to various reasons relating to the US-China trade war, weekly protests, and the coronavirus outbreak, hence Paul Chan announced these numerous relief measures to help ease the burden on individuals and businesses in Hong Kong and to encourage spending to revive the economy.
Continue reading below for our highlights of the budget for SMEs.
Similar to his budget speech for 2019/20, Chan mentioned, “In preparing this budget, I put the focus on ‘supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden.”
The focus on businesses is clear and present with the proposed relief measures mentioned below:
- Profits tax reduction of 100% for the 2019/20 year, up to a limit of HK$20,000.
- Business registration fees waiver for 2020/21 (i.e. companies only need pay HK$250 levy to renew their business registration from April 2020 – March 2021).
- Companies registry fees for annual returns (except for late delivery) waiver for the next two years.
- A concessionary low-interest loan of up to HK$2 million with 100% Government guarantee to be made available to enterprises under the SME Financing Guarantee Scheme.
- Rates for non-domestic properties for 2020/21 waiver of up to a maximum of HK$5,000 per quarter in the first two quarters and a maximum of $1,500 per quarter in the remaining two quarters for each non-domestic property.
- Non-domestic electricity accounts discount of 75% up to a ceiling of HK$5,000 for four months.
- Water and sewage costs discount of 75% up to a cap of HK$20,000 and HK$12,500, respectively.
- Local recycling firms to receive rental subsidy for six months.
- Rent discounts of 50% for tenants of government properties, government land and EcoPark.
It is clear that the Hong Kong government aims to provide ample support and benefits for current and future businesses locally. With the low tax rates, numerous subsidies, and discounts, Hong Kong is looking to restore the allure of setting up and running companies locally encouraging locals and international businesses alike to utilize Hong Kong as a base of operations or to expand their operations in and out of Asia.
As always do keep in mind that proposals set out in the annual Hong Kong Budget are subject to final approval from the Legislative Council. Once approved they will come into effect in the new financial year starting from 1st April 2020.
For the full details of the above and other measures set out in the budget this year check out the link here.