Business relief measures for Hong Kong companies affected by the pandemic.
In response to the ongoing Covid-19 pandemic in Hong Kong, the government has recently launched relief measures to support companies affected by the fifth wave by providing wage subsidies to employers and easing the financial burden of small- and medium-sized enterprises (SMEs).
The measures include Employment Support Scheme and Special 100% Loan Guarantee Scheme.
1. Employment Support Scheme (ESS)
The Hong Kong Government has recently launched a new round of the Employment Support Scheme (ESS) to provide wage subsidies to eligible employers in order to retain or hire more employees when the company recovers from the Covid-19 outbreak. Employers will receive wage subsidies up to HKD 8,000 per month for each employee from May to June 2022.
Employers can apply for the scheme from 29 April 2022 at 8 am to 12 May 2022 at 11.59 pm.
Who is eligible for the ESS?
To be eligible for the ESS, employers must meet the following requirements:
- The employer must not be listed in Part 1 of the Exclusion List.
- Has been making Mandatory Provident Fund (MPF) contributions or set up Occupational Retirement Schemes (ORSO) on or before 31 December
- Has not been involved in the process of deregistration, striking off or winding up or dormant.
- Has resolved any claw backs/penalties of the 2020 ESS on or before 10 May 2022.
Wage subsidy calculation method
Approved applicants for the 2020 ESS must choose to either use (1) their MPF/ORSO records for the 2020 ESS or (2) their MPF/ORSO records for the fourth quarter of 2021 as a basis to calculate the subsidised quota cap and the maximum subsidy amount.
If approved applicants choose:
- MPF/ORSO recordsfor the 2020 ESS– the reference month (RM) can be decided by the applicant under the 2020 ESS.
- MPF/ORSO records for the fourth quarter of 2021 – the RM must be a month between October and December 2021 which can produce the highest level of the maximum subsidy amount. Employers who opt for this method should expect a longer processing time.
Applicants who were not approved or did not apply for the 2020 ESS must use the second method to calculate the subsidised quota cap and the maximum subsidy amount.
The subsidised quota is divided into three categories (fully, half and elderly), and the maximum subsidy amount is calculated based on the applicant’s RM.
Subsidy quota | Monthly wage of the RM (per employee) | Maximum subsidy amount |
Fully subsidy quota | HKD 8,000 or more | HKD 8,000 |
Half subsidy quota | HKD 3,000 but not more than HKD 8,000 | HKD 4,000 |
Elderly subsidy quota | HKD 3,000 for each employee ages 65 and above | HKD 4,000 |
Undertakings and penalty
In each subsidy month, applicants applying for ESS 2022 must undertake to employ a sufficient number of employees, and the employment status must be recorded in the MPF or ORSO scheme records.
The undertaking requirements that must be met are:
- The number of eligible employees with a wage of HKD 8,000 or more in that month should not be less than the full subsidy headcount.
- Having fulfilled the full subsidy headcount requirement in (a), the remaining number of eligible employees with a wage of HKD 4,000 or more is not less than the half subsidy headcount of that month.
- The number of eligible employees aged 65 or above with a wage of HKD 4,000 or more is not below the elderly subsidy headcount of that month.
- Eligible employees with a wage of HKD 4,000 or more are not less than the chosen subsidised headcount.
In the case that employers cannot satisfy the above requirements in any month during the subsidy period, employers must return the subsidy amount and pay a penalty of 10% of the subsidy amount to be returned.
How Acclime can help
To reduce the hassle of having to apply for the scheme by yourself, Acclime can support you with the following:
- Assist your company in collecting the required information for the ESS
- Plan for the ESS eligibility
- Calculate the total maximum subsidy amount your company will get
- Submit the application for your company
- Answer any inquiries raised by relevant government agencies
- Follow-up with the subsidies received by your company after application submission
Never miss an important deadline with our detailed compliance calendar.
Get a clear picture of all the accounting, tax and HR deadlines- Avoid penalties and late fees
- Keep your accountants or accounting firm accountable
2. Special 100% Loan Guarantee Scheme
The Special 100% Loan Guarantee Scheme under the SME Financing Guarantee Scheme aims to enhance cash flow support for SMEs that are experiencing reduced income by providing loans at a low-interest rate. This will alleviate the financial pressure on companies and reduce the number of companies having to shut down or lay off staff.
Companies can apply for the Special 100% Loan Guarantee scheme until 30 June 2023.
What companies are eligible for the special 100% loan guarantee scheme?
To be able to benefit from this scheme, companies must meet the following requirements:
- Must be registered and have been operating in Hong Kong for at least three years
- Must have a valid Business Registration Certificate
- Is not a listed company
- Has experienced at least a 30% decline in sales turnover since February 2020 (affected period) compared to the monthly average of any quarter from January 2019 to March 2022 (reference period), provided that the affected period is not earlier than the reference period.
What are the loan terms?
Terms and conditions that apply to loans under the Special 100% Loan Guarantee Scheme are:
- Maximum loan of up to HKD 9 million or the total amount of employee wages and rent for 27 months. If the company does not have expenses for wages or rental payments, it can be calculated by 50% of the highest monthly net income before tax from January 2019 to March 2022 multiplied by 27.
- Repayment period of up to 10 years
- Maximum principal moratorium period of 30 months
- Does not impose a guarantee fee
- Interest rate of 2.75% per annum
How Acclime can help
If you are applying for the Special 100% Loan Guarantee Scheme, Acclime can help you with the following:
- Get in contact with the desired lender to apply for the Special 100% Loan Guarantee Scheme
- Gather required information for the application
- Complete and submit the application to the lender
- Follow-up with the lender after application submission
Conclusion
In summary, both the ESS and Special 100% Loan Guarantee Scheme aims to financially support local SMEs by providing wage subsidies and low-interest rate loans to enterprises. All employers except employers listed under Part 1 of the Exclusion List are eligible to apply for the ESS and receive wage subsidies of up to HKD 8,000 per month for each employee from May to June 2022.
Under the Special 100% Loan Guarantee Scheme, eligible companies will receive loans to alleviate any financial burden so the enterprise can recover from income loss and continue to operate their businesses during the outbreak. If you need any support applying for the schemes, do not hesitate to contact Acclime. We can help you with anything, from gathering the required information and submitting the application to following up on the application to ensure you receive the entitled subsidies or loans.
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