SNAPSHOTS OF HONG KONG BUDGET 2024/2025
On 28 February 2024, Hong Kong’s Financial Secretary, The Honourable Mr. Paul Chan unveiled Budget 2024-2025 with the theme “Advance with Confidence. Seize Opportunities. Strive for High-quality Development”.
Set against the backdrop of a city that is still facing challenges in recovering its economy to pre-Covid levels, and a whopping budget deficit of HKD 101.6 billion for fiscal year
2023-2024 due to significant shortfall in land related (including stamp duty) revenue, Budget 2024-2025 outlines the Government’s planned revenue and expenditure for the upcoming fiscal year, and policies aimed to achieve diversified and sustainable developments.
Tax plays a crucial role in attracting enterprise and talent. In addition to allocating resources to promote and support high-quality developments, and amongst other measures, the Government
(a) is setting up a task force to respond to the request from the asset and wealth management industry to review the scope of, and consider further enhancements to, the existing tax concession to increase Hong Kong’s competitiveness as an international asset and wealth management hub;
(b) will be introducing a bill in the first half of 2024 to provide for a patent box tax incentive to reduce the tax rate for qualifying profits derived from patents from the existing 16.5% to 5%, and together with other measures, to encourage more research and development activities to help to develop Hong Kong into a regional intellectual property trading hub;
(c) has laid out sector-specific measures to enrich and nurture local talent, and attract and retain talent from outside Hong Kong.
In keeping with the compliance with international tax standards, i.e., the introduction and implementation of global minimum tax and Hong Kong Minimum Top-up Tax at 15% under the scope of the OECD BEPS 2.0 Pillar Two, the relevant bill would be proposed in the second half of 2024. Notwithstanding this minimum tax, Hong Kong’s tax regime will remain attractive because by maintain the territorial source principle of taxation, its tax regime retains simplicity, certainty and transparency.
Budget 2024-2025 adopts a balanced approach to relieve hardship caused by uncertainties in the global economic outlook, and at the same time, revitalizing the economy through tax and non-tax measures. These crucial measures will strengthen Hong Kong as a top-tier international finance and business center.
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© March 2024. This article is contributed by Acutus Tax & Corporate Services Limited. All rights reserved