Hong Kong 2024-25 Budget: Insights for SMEs and Foreign-Owned Companies, February 28, 2024
On 28 February 2024, the Hong Kong Government announced the budget for the upcoming year 2024/25. The budget outlines where the Government is allocating resources through tax and fiscal policies, as well as support measures.
Here, you will find a breakdown of the most relevant budget items for small to medium-sized businesses. We will also cover measures relevant to foreign-owned businesses.
The full announcement and resources can be found at budget.gov.hk.
Salaries Tax And Profits Tax Measures
This year’s salaries tax and profits tax measures have been designed to strike a balance between the Government’s budget deficit and supporting individuals and small businesses.
Reduction of Profits Tax
Why it's important: There has been a long-standing reduction or allowance in profits tax, capped at between HK$6,000 and HK$20,000 every year.
For 2024/25, the reduction of Profits Tax will be 100% on the first HKD$3,000. This means your final tax bill could be reduced by HK$3,000.
Reduction of Salaries Tax or ‘Tax under Personal Assessment’
Similar to the Profits Tax, there has been a reduction or allowance in personal tax every year.
For 2024/25, the reduction of Salaries Tax will be 100% on the first HKD$3,000.
New Tax Band under “Standard Rate”
Hong Kong taxpayers are taxed either at progressive rates between 0 to 17% or at the so-called “Standard Rate” of 15%, whichever is lower. From 2024/25 onwards, taxpayers subject to the “Standard Rate” will be taxed at a rate of 16% (rather than 15%) on net income above HK$ 5,000,000. The new rate affects both salaries taxpayers as well as those assessed under “Personal Assessment”. This only affects extremely high-income earners.
You can find out how to calculate your personal tax rate or ask us for assistance.
Patent Box
The Hong Kong Government will introduce a legislative proposal to implement a ‘Patent Box’ tax incentive with a reduced Profits Tax rate of 5%.
Business Registration Fee
The Government recently waived fees such as the Business Registration Fee, but this is no longer the case.
In 2024/25 the Business Registration Fee will increase to HK$2,200 per year; but the levy (HK$150) will be paused for 2 years; causing a net increase of HK$50.
Business Funding
Take a look at our funding overview for further information about Government and private funding for Hong Kong businesses.
SME Business Loan Guarantees
To assist businesses in securing commercial lending during the pandemic, the Government introduced the 100% loan guarantee scheme, the SME financing Guarantee Scheme.
The applications for 80-90% SME financing Guarantee Schemes will extended to March 2026.
The Government expects commercial lending to pick up again, but allowing time to secure funding, they have extended the application period.
Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund)
HK$500 million is earmarked for “e-Commerce Easy”, providing up to HK$ 1 Million per company for implementing e-commerce projects in Mainland China.
Digital Transformation Support Pilot Programme: SMEs in F&B and retail are invited to select digital solutions in the first part of this year.
Stamp Duty - Residential Property Market
From 28 February 2024, there is no Stamp Duty (Special Stamp Duty, Buyers’ Stamp Duty or New Residential Stamp Duty) payment required for any residential property transactions.
Bring businesses back to Hong Kong
In the first half of 2024, a legislative proposal for a re-domiciliation mechanism for foreign companies to come to Hong Kong will be submitted
Budget support for specified industries
Hong Kong uses tax concessions and policy measures extensively in order to attract certain industries.
The 2024/25 budget proposes concessions for the industries as follows.
Maritime businesses
To promote the development of Hong Kong as an international maritime centre, the Government is:
Studying enhancements to tax concession measures for the maritime industry
They also plan to offer block registration incentives to shipowners to encourage registration in Hong Kong.
GreenFuture
As well as supporting sustainability through GreenFinance and GreenTech, the Government also plans to encourage decarbonisation of traditional industries such as Maritime and Aviation.
Green Aviation
Promote the use of Sustainable Aviation Fuel in Hong Kong
Strengthen aviation services with current major routes and routes along the Belt and Road in support of “Air Silk Road”
GreenFinance
The Government plans to assist companies and financial institutions in sustainability reporting and data analysis. Other GreenFinance measures include:
Green and Sustainable Finance Grant Scheme: extended to 2027
Green and Sustainable Fintech Proof of Concept Subsidy Scheme: to be launched in the first half this year
Co-host a Joint Climate Finance Conference in Hong Kong with Dubai
Microelectronics
These components are key in technology and are experiencing global demand, leading Hong Kong to embrace it as an opportunity for growth.
There are plans to establish the Hong Kong Microelectronics Research and Development Institute in 2024 to facilitate research collaboration on third-generation semiconductors
Innovation and technology
The Government supports and encourages the I&T ecosystem. In 2024/25 there is a high emphasis on Life and Health technology. The Government plans to invest in the following ways:
AI Supercomputing Centre: First phase facility to operate in 2024 earliest. Allocate HK$3 billion to support local universities, R&D institutes and enterprises to leverage its computing power, etc
HK$6 billion for universities to set up life and health technology research institutes
Set up the Greater Bay Area International Clinical Trial Institute in Hetao Shenzhen Hong Kong Science and Technology Innovation
Launch the New Industrialisation Acceleration Scheme this year and provide enterprises with up to HK$200 million on a matching basis
HK$2 billion to support the presence of InnoHK research clusters in Hetao
HK$200 million to support incubation and acceleration programmes for Hetao start-ups engaging in life and health technology
HK$3 billion earmarked to launch a Frontier Technology Research Infrastructure Support Scheme
Trade
Hong Kong is developing a multinational supply chain management centre. With this, it plans to:
Provide consulting services, trade financing and corporate training
Study the establishment of a trade single window to provide one-stop services for enterprises
Attract Mainland manufacturing enterprises to set up offshore trading management headquarters in Hong Kong
New trade markets will be explored in Riyadh, Saudi Arabia and Kuala Lumpur, Malaysia.
Organise “Belt and Road Festival” and “Belt and Road Initiative Tax Administration Cooperation Forum” in 2024.
Stock Markets
The Government will put in place the following measures:
Enhance Stock Market Liquidity
Introduce treasury share buy-back regime
Maintain trading operations under severe weather
Waive stamp duties payable on transfer of Real Estate Investment Trust (REIT) units and jobbing business of option market-makers
It will also explore measures to:
Enhance listing regime
Improve transaction mechanism
Boost investor services, step up market promotion, etc.
Tourism
The Budget allocates over HK$1.09 billion to strengthen tourism, Hong Kong’s brand and to encourage events.
Highlights include regular visual displays on the Hong Kong skyline and outdoor and young-adult-focused activities.
The Government plans to earmark HK$100 million to boost mega-event promotions over the next 3 years.
The business community will see continued financial forums, such as the Global Financial Leaders’ Investment Summit and the Wealth for Good in Hong Kong Summit
For more in-depth information or questions about the budget, please reach out to us.