Announcement of the 2023-24 Hong Kong Budget

On 22 February 2023, Financial Secretary Paul Chan of the HKSAR has delivered the 2023-24 Budget.

This is not only the first budget of the new officials, but also the first budget to be presented since Hong Kong's emergence from the epidemic and resumption of quarantine-free travel with the mainland and the international community.

The theme of this year's Budget is: Leaping Forward Steadily, Together We Bolster Prosperity under Our New Vision. Major implementations in the Budget include the followings:

Relieve the Society's Burden

• Reduce salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100 percent, subject to a ceiling of $6,000 (HKD, same as below).
• Provide rates concession for domestic properties for the first two quarters of 2023/24, subject to a ceiling of $1,000 per quarter for each rateable property.
• Issue electronic consumption vouchers with a total value of $5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above in two instalments. Besides, issue electronic consumption vouchers with a total value of $2,500 for the new eligible persons who have come to live in Hong Kong through different admission schemes or to study in Hong Kong.
• Provide an allowance to eligible social security recipients, equal to one half of a month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Living Allowance or Disability Allowance.
• Extend the Public Transport Fare Subsidy Scheme for a period of six months until October 2023.
• Grant each eligible residential electricity account a subsidy of $1,000 and extend the current arrangement of distributing electricity charges relief of a $50 a month to each eligible residential electricity account to 2025 year-end.
• Pay the examination fees for school candidates sitting for the 2024 Hong Kong Diploma of Secondary Education Examination.
• Increase the basic child allowance and the additional child allowance for each child born during the year of assessment from $120,000 to $130,000.

Support Enterprises

• Reduce profits tax for the year of assessment 2022/23 by 100 percent, each case is subject to a ceiling of $6,000.
• Provide rates concession for non-domestic properties for the first two quarters of 2023/24, subject to a ceiling of $1,000 per quarter for each rateable property.
• Keep granting 50 percent rental or fee concession to eligible tenants of government premises and eligible short-term tenancies and waivers under the Lands Department for six months until 2023 year-end.
• Extend the Application Period of all guaranteed products under the SFGS to end-March 2024.
• Estimate to launch new schemes within April this year to offer fully guaranteed loans for eligible passenger transport operators and licensed travel agents. Besides, extend the Travel Agents Incentive Scheme to June 2023. Apart from these, inject $30 million into the Information Technology Development Matching Fund Scheme for Travel Agents.

In addition, the SAR will actively align with national development strategies, promote digital economy, green technology, life and health science and artificial intelligence etc. The SAR will commit to introducing enterprises, nurturing startup companies, improving securities market IPO requirements and trading mechanisms, consolidating Hong Kong's position as assets and wealth management centre (including the tax concession for eligible family-owned investment holding vehicles (FIHVs) managed by single family offices (SFOs), strengthening overseas economic and trade connections, and opening target emerging markets.

It is worth noting that the SAR plans to implement a minimum effective tax rate (15%) targeting on large multinational enterprise (MNE) groups with global turnover of at least 750 million euros, starting from 2025. On the other hand, the SAR will implement the domestic minimum top-up tax to safeguard our taxing rights and maintain the competitiveness of our tax engine. Moreover, the government will provide clearer guidelines on whether onshore gains on disposal of equity interests are subject to tax.

To summarize, under the influence of different factors, like resources constraint, tightened financial regulations, slow global growth and the geopolitics tension, fully recovery is still a long way to go, and this year Budget will follow a cautious and pragmatic way to react. We look forward to seeing the government can reasonably deploy limited resources to strengthen the recovery ability and thus resume Hong Kong's economic power, as well as developing a high-quality economy.