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Hong Kong 2023-24 budget highlights.

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Hong Kong’s Financial Secretary Paul Chan announced the Hong Kong 2023-24 Budget on February 22, 2023.

Chan’s budget included several new policies and programs to increase consumption, support businesses, and attract investment. The government plans to allocate more than 80% of its resources towards developing small and medium-sized enterprises (SMEs).

This article summarises key points from Budget 2023-24 for businesses and the public.

Supporting enterprises

To relieve business operating pressures, Chan proposed the following policies:

  • Reducing profits tax for the year of assessment 2022/23 by 100%, subject to a ceiling of HKD 6,000
  • Providing rates concession for non-domestic properties for the first two quarters of 2023-24, subject to a ceiling of HKD 1,000 per quarter for each rateable property
  • Beginning in July 2023, eligible tenants of government premises and eligible short-term tenancies and waivers under the Lands Department will receive a 50% rental or fee concession for six months until the end of 2023.
  • Extending the application period for all SME Financing Guarantee Scheme (SFGS) guarantee products from the end of June 2023 to the end of March 2024
  • Launching new schemes offering fully guaranteed loans to eligible passenger transport operators and licensed travel agents, involving a total loan guarantee of approximately HKD 2.7 billion, to support cross-border passenger transportation and the tourism industry.
  • Extending the Travel Agents Incentive Scheme, which is set to expire at the end of March 2023, for three months and investing HKD 30 million in the Information Technology Development Matching Fund Scheme for Travel Agents to encourage the industry to upgrade and transform by making use of technology.

Attracting enterprises

The Office for Attracting Strategic Enterprises (OASES), the Advisory Committee on Attracting Strategic Enterprises and the Dedicated Teams for Attracting Businesses and Talents were established to attract representative and high-potential strategic enterprises from around the globe, which would enhance competitiveness and accelerate the development of industries.

The government intends to introduce a mechanism to facilitate re-domiciliation to Hong Kong for companies domiciled overseas, particularly those focusing on the Asia-Pacific region. This initiative aims to give these businesses the opportunity to benefit from Hong Kong’s advantageous business environment and professional services.

The Chief Executive proposed establishing the Hong Kong Investment Corporation Limited (HKIC) to maximise the use of fiscal reserves for economic and industrial growth, attracting investment and companies while also promoting cooperation between Hong Kong and sister cities in the GBA.

The government will also allocate HKD 100 million to InvestHK over the next three years to attract more family offices to Hong Kong.

Supporting the general public

To relieve the general public’s economic stress, Chan introduced the following one-time relief measures:

  • Reducing salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a ceiling of HKD 6,000
  • Providing rates concession for domestic properties for the first two quarters of 2023-24, subject to a ceiling of HKD 1,000 per quarter for each rateable property
  • Providing eligible social security recipients with an allowance equal to one-half of a month’s standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance
  • Extending the temporary special measures under the Public Transport Fare Subsidy Plan for six months until October 2023 to give commuters a subsidy equal to one-third of their actual monthly public transportation expenses over HKD 200, up to a monthly cap of HKD 500
  • Paying the examination fees for school applicants taking the 2024 Hong Kong Diploma of Secondary Education Examination
  • HKD 1,000 subsidy for each eligible residential electricity account
  • Starting in 2023/24, the child allowance for each child born during the assessment year will be increased from HKD 120,000 to HKD 130,000

Pooling talent

The 2022 Policy Address proposed an array of initiatives to trawl for outside talent in addition to the government’s efforts to nurture local talents. These initiatives include the Top Talent Pass Scheme and the Hong Kong Talent Engage establishment.

Additionally, the Labour and Welfare Bureau (LWB) will begin a new round of manpower projections in the middle of this year to assist the government in developing appropriate strategies to address overall manpower demand.

To enrich the talent pool and attract more new capital to Hong Kong, the government will introduce a new Capital Investment Entrant Scheme. Applicants must make an investment in the local asset market, excluding property and will be able to reside and pursue development in Hong Kong once approved.

Talent resources

The government has also taken decisive action to promote talent development and employment opportunities in a variety of fields, including the financial services, maritime, aviation and logistics industries, innovation and technology, and construction industry:

  • Fintech internship scheme for post-secondary students – facilitates eligible students to acquire practical work experience in Fintech enterprises in Hong Kong or the wider GBA.
  • Pilot Programme to Enhance Talent Training for the Insurance Sector and the Asset and Wealth Management Sector – extended by three years to nurture more talents and improve the practitioners’ level of professional proficiency
  • Maritime and Aviation Training Fund (MATF) – inject HKD 200 million into the MATF to support manpower training in the logistics industry, promote the development of high-end, high-value-added and smart logistics and encourage the industry to work with tertiary institutions and professional associations to recruit more young people to the sector. The Maritime Services Traineeship Scheme will also be launched this year to provide traineeship opportunities to young people who want to work in maritime law.
  • GBA Youth Aviation Industry Internship Program – first-year training places will be increased from 300 to 450
  • IT-related extracurricular activities – make an additional HKD 300 million in funding to continue providing subsidies of up to HKD 1 million to each publicly-funded secondary school for the organisation of IT-related extracurricular activities over the next three academic years
  • Construction-related degree programmes – collaborate with tertiary institutions to provide comprehensive study and career development pathways and will introduce a two-year pilot program to pay trainees who have enrolled in part-time degree programs linked to construction for on-the-job training allowance. Approximately HKD 100 million will be invested
  • First-hire-then-train subsidy scheme – allocated HKD 7 million to collaborate with the Hong Kong Institution of Construction to launch a two-year first-hire-then-train subsidy scheme to provide on-the-job training allowance to trainees enrolled in Construction Safety Officer courses

Promoting digital economy

The government will earmark HKD 500 million for Cyberport to launch a Digital Transformation Support Pilot Programme to help SMEs implement ready-to-use basic digital solutions.

Web3 (the third-generation internet) has huge potential, and it is crucial to stay up-to-date and capitalise the opportunity to drive innovation forward. The Hong Kong government will allocate HKD 50 million to expedite the development of the Web3 ecosystem through initiatives such as organising major international seminars, promoting cross-sectoral business cooperation and arranging workshops for young people.

International GreenTech and GreenFi Centre

To accelerate Hong Kong’s growth as a global hub for green technology and finance, the government have proposed five directions:

  • Establishing a green technology ecosystem to attract top-tier enterprises or start-ups, encouraging efficient interaction among industry, academia, and research sectors to commercialise R&D results and increasing demand for green technology through policy support
  • Green finance application and innovation: enabling green projects to access capital with more convenience and flexibility through financial innovations that go beyond traditional financing channels
  • Green certification and alignment with international standards
  • Training for talents
  • Increasing exchange and cooperation with the GBA of Guangdong, Hong Kong and Macao, as well as international markets

Caring and inclusion

HKD 100 million will be set aside to strengthen support for women’s development and related tasks, such as assisting women in taking on different roles in the job market, providing them with training on child and elderly care, promoting work-life balance and mental health, and organising sharing and learning activities.

Chan also proposed increasing the tax deduction for the Mandatory Provident Fund (MPF) voluntary contributions made by employers for their employees aged 65 and above from 100% to 200% to encourage employers to continue hiring mature employees while also increasing their retirement savings.

Post-epidemic recovery

The government will set aside HKD 100 million to attract more mega events with significant visitor appeal and tourism promotional effects to be staged in Hong Kong to improve the city’s international image.

Furthermore, the Hong Kong Tourism Board (HKTB) will spend over HKD 250 million to continue organising or promoting major tourism events, such as the Hong Kong Pop Culture Festival, the Hong Kong Wine and Dine Festival, the Hong Kong International Dragon Boat Races, the Hong Kong Cyclothon, the Hong Kong Sevens and the Arts Basel in Hong Kong.

The Hong Kong Trade Development Council (HKTDC) will host more than ten major conferences and exhibitions in the coming months. Moreover, as the Belt and Road (B&R) Initiative celebrates its tenth anniversary this year, the government will continue co-organising the annual B&R Summit with the HKTDC to promote Hong Kong as a functional platform and key link for the B&R Initiative.

The government will also provide an additional HKD 200 million to the HKTB to help it secure more international meetings; incentive travels, conventions and exhibitions (MICE) of various scales and types in finance, innovation and technology and medicine.

Final thoughts

The 2023-24 Hong Kong budget intends to support businesses, attract investment, relieve economic stress and promote talent development. Some of the key policies include tax reductions, property rate concessions, rental and fee concessions, guaranteed loans, and the formation of the Hong Kong Investment Corporation Limited. If you have any further questions, feel free to contact us.

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Hong Kong 2023-24 budget highlights