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The Financial Secretary of the Hong Kong Special Administrative Region, Mr. Paul Chan Mo-po, delivered the 2019/20 budget speech on February 27, 2019. A surplus of HK$58.7 billion is expected for 2018/19 and fiscal reserves to reach HK$1,162 billion by 31 March 2019.

 

According to the budget, the GDP of Hong Kong increased by 3%, the underlying inflation rate was 2.6%, and the unemployment rate was 2.8% in year 2018, which is the lowest rate in the recent twenty years. The total government revenue and expenditure in year 2019 are expected to be HK$626.1 and HK$607.8 respectively with the economic growth rate of 2-3% and inflation rate of around 2.5%. “Looking ahead, the unemployment rate is expected to remain low.” Said Mr. Chan.

 

The major direction of the draft of budget is to support enterprises, ensure employment, stabilize the economy and benefit the people. The major proposals with respect to tax for individual and business are summarized as below:

 

Relieve People's Burden and Support Enterprises

Reduce profits tax, salaries tax and tax under personal assessment for Year of Assessment 2018-19 by 75％, subject to a ceiling of $20,000;

Waive the business registration fees for 2019-20

 

Waive rates for 4 quarters of 2019-20, subject to a ceiling of $1,500 per quarter for each rateable property;

Provide an extra 1 month allowance to recipients of CSSA, Old Age Allowance, Old Age Living Allowance or Disability Allowance; similar arrangements will apply to Working Family Allowance and Work Incentive Transport Subsidy

 

Provide a one-off grant of $2,500 to each student in need

Provide a one-off additional $1,000 worth of Elderly Health Care Vouchers, and increase the accumulation limit of vouchers to $8,000

 

Pay the examination fees for school candidates sitting for the 2020 Hong Kong DSE Examination

 

 

 

 

Other Major Measures to Support the Economic Developments of Hong Kong

 

Consolidate International Finance Position

 

  • Issue the fi­rst batch of government green bonds to promote the development of green finance
  • Consider establishing a Limited partnership regime and introducing tax arrangement to attract private equity funds to set up and operate in Hong Kong
  • Promote mutual recognition of funds with other jurisdictions to broaden the distribution network of local fund products
  • Provide tax concessions for marine insurance and underwriting of specialty risks, and facilitate them to issue insurance-linked securities
  • Promote the use of Faster Payment System for payment of government fees and charges
  • Issue virtual bank licences
  • Provide a HK$400 million seed capital for the Financial Reporting Council and enable it to waive levy in the fi­rst two years under the new regulatory regime

 

Enhance Support on Innovation and Technology Industry

 

  • Set aside $5.5 billion for the development of Cyberport 5 to accommodate more technology companies and start-ups
  • Set aside $16 billion for universities to enhance or refurbish campus facilities, in particular those for R&D
  • Inject $20 billion into the Research Endowment Fund of the Research Grants Council under the University Grants Committee to provide research funding
  • Establish two innovative clusters in the Science Park focusing on “A.I. and robotic technologies” and “healthcare technologies”, pooling top-notch universities and institutions to collaborate and undertake R&D activities
  • Launch the $2 billion Re-industrialisation Funding Scheme in 2019
  • Expand the Corporate Venture Fund of the Science Park to $200 million

 

Attract and Train Talents

  • Allocate $800 million to support R&D work and the realization of R&D results by universities, key laboratories and engineering research centers;
  • Double the annual funding ceiling for each university under the Technology Start-up Support Scheme for Universities to $8 million;
  • Increase the monthly allowance for researchers under the Researcher Programme to attract local graduates to join the I&T sector;
  • Extend the funding period under the Researcher Programme and the Postdoctoral Hub Programme;
  • Establish the Academy of Finance in mid-2019 to promote financial leadership development

 

 

Although the budget is still under the scrutiny of the legislative council, as per our previous experience, it is expected to be approved. For this reason, Kaizen suggests you to consult with professional tax advisors before the proposals coming into effect.

 

Should you have any questions in relation to the proposals, please feel free to contact our CTAs in charge of Hong Kong Financial Budgets.

 

If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:

Tel: +852 2341 1444

Mobile: +852 5616 4140, +86 152 1943 4614

WhatsApp/ Line/ Wechat: +852 5616 4140

Skype: kaizencpa

Email: info@kaizencpa.com

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