By Steven Kwan:
On 27 February 2019, Mr. Paul Chan, Financial Secretary, delivered his third budget speech. He forecasts economic growth of 2 to 3% in 2019 and projects a surplus of HKD58.7 billion in the Consolidated Account for 2018/19.
Facing uncertainties arising from the complicated and volatile external environment in the coming year, the Financial Secretary proposes a number of measures that will help supporting enterprise, safeguarding jobs, stabilizing the economy and strengthening livelihoods. These measures include the following:-
1. Profits Tax
- Reducing profits tax by 75% for 2018/19, subject to a ceiling of HKD20,000, effectively giving companies with profits tax payable of HKD26,667 or more a HKD20,000 rebate.
2. Salaries Tax/Tax under Personal Assessment
- Reducing 75% of salaries tax and tax under personal assessment for 2018/19, subject to a ceiling of HKD20,000, effectively giving salaries tax payers with a salaries tax payable of HKD26,667 or above a HKD20,000 rebate.
- New tax deduction of HKD8,000 per insured person for qualifying Voluntary Health Insurance Scheme Policy Premiums.
- New tax deduction of HKD60,000 for Annuity Premiums and MPF Voluntary Contributions.
3. Rates
- Waiving rates for four quarters of 2019/20, subject to a ceiling of HKD1,500 per quarter for each rateable property.
4. Business Registration fee
- Waiving business registration fees for 2019/20.
5. Other relief measures
- Providing a one-off grant of HKD2,500 to each student in need to support learning.
- Paying the examination fees for school candidates sitting for the 2020 Hong Kong Diploma of Secondary Education Examination.
- Providing an extra one month allowance to recipients of CSSA, Old Age Allowance, Old Age Living Allowance, Disability Allowance, Low-income Working Family Allowance and Work Incentive Transport Subsidy.
- Providing a one-off additional HKD1,000 vouchers to the elderly eligible for the Elderly Health Care Voucher Scheme. Increasing the accumulated limit of vouchers from HKD5,000 to HKD8,000.
6. Concessionary measures under the SME Financing Guarantee Scheme
- Reducing the guarantee fee rates by 50%.
- Increasing maximum loan amount to HKD15 million.
- Lengthening maximum loan guarantee period to 7 years.
- Extending the application period of the special concessionary measures under the SME Financing Guarantee Scheme to 30 June 2020.
- Regularizing the Technology Voucher Programme and doubling the funding ceiling for each enterprise from HKD200,000 to HKD400,000.
7. Financial services industry
- Issuing the first batch of government green bonds to promote the development of green finance.
- Considering establishing a limited partnership regime and introducing tax arrangement to attract private equity funds to set up and operate in Hong Kong.
- Promoting mutual recognition of funds with other jurisdictions to broaden the distribution of network of local fund products.
- Providing tax concessions for marine insurance and underwriting of specialty risks, and facilitate them to issue insurance-linked securities.
8. International Transportation Centre
- Considering introducing tax and related measures to attract ship finance companies to develop ship leasing business in Hong Kong.
- Providing a 50% profits tax concession to marine insurance businesses.
9. Innovation and Technology
- Setting aside HKD5.5 billion for the development of Cyberport 5 to accommodate more technology companies and start-ups.
- Setting aside HKD16 billion for universities to enhance or refurbish campus facilities, in particular those for research and development.
- Injecting HKD20 billion into the Research Endowment Fund of the Research Grants Council under the University Grants Committee to provide research funding.
- Launching the HKD2 billion Re-industrialization Funding Scheme in 2019.