Hong Kong Announced Its 2022-23 Budget
On February 23, the Financial Secretary of the Hong Kong Special Administrative Region, Paul MP Chan, delivered the 2022-23 Budget.
The tax measures introduced in this year's budget are not much different from last year's, and the budget continues to adopt an expansive fiscal policy. The measures include the following:
Relieving People's Hardship
- Reduce salaries tax and tax under personal assessment for the year of assessment 2021/22 by 100%, subject to a ceiling of HKD 10,000 for each case.
- Provide a tax deduction for domestic rental expenses starting from the year of assessment 2022/23 so as to ease the burden of renting a private property on taxpayers liable to salaries tax and tax under personal assessment who are not owners of domestic properties, subject to a deduction ceiling of HKD 100,000 for a year of assessment.
- Electronic consumption vouchers with a total value of HKD 10,000 will be disbursed by instalment to each eligible Hong Kong permanent resident and new arrival aged 18 or above through suitable stored value facilities.
- Provide rates concession for domestic properties for 2022/23, subject to a ceiling of HKD 1,500 per quarter in the first two quarters and a ceiling of HKD 1,000 per quarter in the remaining two quarters.
- Grant each eligible residential electricity account a subsidy of HKD 1,000.
- Provide an extra half-month allowance of standard CSSA payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. Similar arrangements will apply to Working Family Allowance.
- Lower the threshold for the Public Transport Fare Subsidy Scheme from HKD 400 to HKD 200 from May to October this year. The Government will provide commuters with a subsidy amounting to one-third of their actual monthly public transport expenses in excess of HKD 200, subject to a maximum of HKD 500 per month.
- Pay examination fees for school candidates sitting for the 2023 HKDSE Examination.
- Extend the 100% Personal Loan Guarantee Scheme for one year until the end of April next year. The maximum loan amount per applicant will increase from six times to nine times of his/her average monthly income during employment, and the ceiling will increase from HKD 80,000 to HKD 100,000. In addition, the maximum repayment period under the scheme will be extended from six years to 10 years, whereas the maximum duration of principal moratorium will be extended from 12 months to 18 months.
- Allocate HKD 47.5 billion for stepping up anti-epidemic efforts, and earmark HKD 20 billion for other potential anti-epidemic needs.
- Strengthen support for e-learning of students from grassroots families through the HKD 2 billion set aside in the Quality Education Fund.
- Reduce profits tax for the year of assessment 2021/22 by 100%, subject to a ceiling of HKD 10,000 for each case.
- Provide rates concession for non-domestic properties for 2022/23, subject to a ceiling of HKD 5,000 per quarter in the first two quarters and a ceiling of HKD 2,000 per quarter in the remaining two quarters.
- Waive the business registration fees for 2022/23.
- Continue to waive 75 per cent of water and sewage charges payable by non-domestic households for eight months until 30 November 2022, subject to a monthly ceiling of HKD 20,000 and HKD 12,500 respectively per household.
- Extend the waivers/concessions of the existing 34 groups of government fees and charges (including aviation, maritime, logistics, retail, catering, fisheries, tourism and entertainment) for 12 months starting from October this year.
- Continue to grant the 75% rental/fee concession to eligible tenants of government premises/short-term tenancies and waivers for six months until 30 September 2022 (100% concession for those closed at the Government’s request).
- Extend the application period of all guarantee products under the SME Financing Guarantee Scheme (SFGS) for one year to the end of June next year. The Special 100% Loan Guarantee under the SFGS will also be further enhanced by increasing the maximum loan amount per enterprise from the total amount of employee wages and rents for 18 months to that for 27 months with the loan ceiling raised from HKD 6 million to HKD 9 million, and by extending the maximum repayment period from eight years to 10 years.
- Extend the Pre-approved Principal Payment Holiday Scheme for six months to the end of October this year.
- The Hong Kong Export Credit Insurance Corporation (ECIC) plans to launch the Export Credit Guarantee Programme on a pilot basis in March this year, under which the ECIC will guarantee up to 70 per cent of the export financing of their policyholders, subject to a maximum limit of HKD 50 million. In addition, the ECIC will introduce the “Flexible Indemnity Ratio” arrangement in the second half of this year to enhance insurance coverage for exporters.
In conclusion, this year's budget is both pragmatic and cautious in the face of the economic contraction caused by the continuing impact of the pandemic, and there is still a long way to go before the market fully recovers. In the face of a complex and volatile international political and economic environment and the occasional outbreaks, we expect the Government to use its limited resources wisely to consolidate and promote Hong Kong's economic development and revitalize the post-epidemic economy. May Hong Kong maintain its competitiveness and continue providing a stable business environment.