SNAPSHOTS OF HONG KONG BUDGET 2019/2020
The Finance Secretary Mr. Paul Chan delivered his budget speech on 27 February 2019 against the backdrop of a significant fall in Hong Kong’s fiscal surplus in 2018. Amidst uncertainties, such as the US-China trade disputes, slowdown of China economy and the effects of Brexit, Mr Chan foresees that the Hong Kong economy could slow further this year.
Notwithstanding these uncertainties, Mr Chan explained that the broad directions of his budget are directed to invest substantially towards “supporting enterprises, safeguarding jobs, stabilising the economy and strengthening livelihoods”. If the economic challenges continue to intensify, the government may be faced with the possibility of spending its fiscal reserves. It is therefore necessary to strike a balance between investing for the future and adhering to long-held principle of fiscal prudence.
On the tax front, Mr Chan continues to offer tax reduction, rates and business registration waivers targeted at short-term reliefs. Save for these measures, the budget appears to contain limited forward-looking fiscal policies but statement of measures carried forward from prior years.
A one-off tax reduction of 75% of profits tax for 2018/2019, subject to a ceiling of HK$20,000.
Continue the implementation of the two-tiered profits tax rates regime.
A one-off tax reduction of 75% salaries tax and tax under personal assessment for 2018-2019, subject to a ceiling of HK$20,000.
Introduce deduction for Qualifying Voluntary Health Insurance Scheme Policy Premiums and Annuity Premiums and MPF Voluntary Contributions.
Rates for 2019-2020 will be waived for the four quarters, subject to a ceiling of HK$1,500 per quarter for each rateable property.
Business registration fees for 2019-2020 to be waived.
Potential tax-related development
Expand the network of Comprehensive Avoidance of Double Taxation Agreement.
Consider establishing a limited partnership regime and introducing tax arrangement to attract private equity funds to set up and operate in Hong Kong and to offer more fund structure choices to the industry.
Potential tax-related development (continued)
Propose to provide tax concessions for marine insurance and underwriting of specialty risks.
Review to enhance tax concessions for qualifying corporate treasury centres.
Consider introducing tax measures to attract ship finance companies to develop ship leasing businesses in Hong Kong.
Offer 50% profits tax concession to eligible insurance businesses including the marine insurance industry.
Propose to extend the use of Faster Payment System (FPS) for payment of taxes, rates and other government fees.
Propose to enhance various tax measures and ease the tax burden, in particular for small and medium enterprises and the middle class.
The information contained in this publication is based on the Budget proposal announced by the Financial Secretary on Wednesday, 27 February 2019. The Budget proposal will be subject to review and modification by the Legislative Council prior to the enactment of the legislation.
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© March 2019. This article is contributed by Acutus Tax & Corporate Services Limited. All rights reserved