Hong Kong Budget Announcement 22 Feb 2023: 2023/24 Budget – What businesses need to know
On 22 February 2023, the Hong Kong Government announced the budget for the upcoming year 2023/24. 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.
Small and medium-sized enterprises are a focus for the Government, with over 80 per cent of the budget allocated to benefit businesses, as well as the general public.
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
There has been a long-standing reduction or allowance in profits tax, capped at between $10,000 and $20,000 every year. For 2023/24, the reduction of Profits Tax will be
100% on the first HKD$6,000.
This means your final tax bill could be reduced by HK$6,000.
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 2023/24, the reduction of Salaries Tax will be 100% on the first HKD$6,000.
In addition to the personal tax deduction, parents can get additional tax breaks. The ‘basic’ and ‘additional’ child allowances will increase to HKD$130,000 from the current $120,000. This applies to each child born from 1 April 2023 to 31 March 2024 and could benefit 324,000 taxpayers.
Business Funding
Take a look at our overview for further information about Public and private funding for Hong Kong businesses.
Business Registration Fee
The Government has recently waived fees such as the Business Registration Fee. In 2023/24 there is no longer a Business Registration Fee waiver.
100% Special Business Loan Guarantee
To assist businesses in securing commercial lending during the pandemic, the Government introduced the 100% loan guarantee scheme.
This measure comes in addition to loan guarantee schemes that did not guarantee the full amount. The application period for this loan guarantee is extended to March 2024.
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)
It has assisted 3,900 enterprises over the years in exploring new markets. $500 million will be added to the fund.
"BUD Easy" will be launched to enable more SMEs to make use of the funding to develop their business.
$100 million over five years is proposed to assist SMEs in applying for government subsidies.
Budget support for specified industries
Hong Kong uses tax concessions and policy measures extensively in order to attract certain industries.
For example, in the 2022/23 tax year, these concessions have included an exemption from tax for Family Offices and maritime businesses.
The 2023/24 budget proposes concessions for the industries as follows.
Family Offices
Family offices are encouraged to offer a channel for investment through tax exemptions. $100 million is allocated to InvestHK over the next three years in order to attract more family offices to Hong Kong.
In addition, the Financial Services and the Treasury Bureau plan to provide training for wealth management, and to oversee key projects including the "Wealth for Good in Hong Kong" summit in March 2023.
Maritime businesses
To promote the development of Hong Kong as an international maritime centre. Bringing together industry players and government, a task force will be set up to:
(a) Enable Hong Kong to become a global leading high‑end maritime service market;
(b) Reduce carbon emissions
(c) Promote digitalisation in the maritime industry;
(d) Promote exchanges and collaboration among maritime industries in the GBA and those around the world.
$20 million is set aside for studies on how to promote the high‑end maritime service industry. The annual flagship event Hong Kong Maritime Week will also expand.
Aircraft Leasing
The Government aims to attract more aircraft leasing companies to Hong Kong, to establish the city as a leasing and services hub. A tax deduction will be proposed for the purchase cost of aircraft, as well as changes to the scope of leases and aircraft leasing activities
Green Finance and GreenTech
The Government has recently been focused on GreenTech and Green Finance. For example, HK$ 800 million in tokenised green bonds were issued in February 2023. A Green Technology and Finance Development Committee is now on the books for 2023. Its agenda will include a green technology ecosystem to attract enterprises or start-ups to set up their operations in Hong Kong.
Through policy support, it aims to “encourage efficient interaction among industry, academia and research sectors to commercialise R&D outcomes, and boost the demand for green technology...”
GreenTech Week will be hosted at the end of 2023 to attract international interest. If you’re in GreenTech or GreenFinance, keep an eye on further announcements.
Microelectronics
These components are key in technology and are experiencing global demand, leading Hong Kong to embrace it as an opportunity for growth. A Microelectronics Research and Development Institute will be developed, aiming to lead the way in the Asia-Pacific region.
University, R&D and industry ties will be strengthened, along with talent brought in from Mainland China and overseas.
Innovation and technology
The Government supports and encourages the I&T ecosystem, smart city and digital economy through the HKSTPC and Cyberport. More technology start-ups will benefit through the $400 million allocated to the Corporate Venture Fund.
The HKSTPC will also inject a further $110 million to support technology start-ups with high growth potential.
$265 million will allow Cyberport to launch an incubation programme for smart living start‑ups, offering a maximum grant of $500,000 as well as targeted professional support and counselling.
90 eligible start‑ups are expected to benefit from the programme in each of the next five years.
The Hong Kong Exchange (HKEX) will also introduce measures this year to assist in financing.
Tourism
Ahead of the budget, the Government announced the giveaway of 500,000 airline tickets both to Hong Kong residents and overseas residents, in an effort to revive the tourism industry. $100 million will go towards attracting events with large tourism and visitor potential.
$250 million is allocated by the tourism board to organise or promote major tourism events. These include:
Hong Kong Pop Culture Festival
Hong Kong Wine and Dine Festival
Hong Kong International Dragon Boat Races
Hong Kong Cyclothon
Hong Kong Sevens
Arts Basel in Hong Kong
The Government will also offer $2.7 billion for fully guaranteed loans for eligible passenger transport operators and licensed travel agents.
The Government will also extend the Travel Agents Incentive Scheme to end‑June 2023.
In addition, $30 million is aimed at encouraging the industry to upgrade and make use of technology.
To bring businesses back to Hong Kong
To encourage businesses who may have moved away to move back, the Government plans to “conduct consultation and submit legislative proposals in 2023/24”, with a view to facilitating this move.
Measures to benefit individuals and the general public
Consumption Vouchers
In the 2022/23 budget, the Government announced a digital payment of $10,000 per permanent resident.
Prior to the announcement of the budget, there was a lot of discussion on whether the Government should issue another round of consumption vouchers or whether they should work on closing the budget deficit.
$5,000 will be offered to each eligible Hong Kong permanent resident and new arrivals aged 18 or above in two instalments.
The first disbursement, valued at $3,000, will be in April, and the second will be in the middle of the year.
$2,500 will be offered to some non-permanent residents, with details to follow.
Immigration & Visas
In 2022/23 the Government introduced the Top Talent Pass Scheme to improve access to visas for select professions. Expanding on its strategy from 2022/23, the Government is introducing initiatives such as the and Hong Kong Talent Engage to nurture local talent and bring in new talent from specific professions.
Capital Investment Entrant Scheme will be introduced to attract more new capital to Hong Kong. Investment in the local asset market is required, excluding property.
A final note from the announcement on Hong Kong’s resilience.
“History has taught us that Hong Kong people can always turn crises into opportunities in turbulent and stormy times and achieve still greater development.”
We’d definitely agree.
For more in-depth information or questions about the budget, feel free to reach out to us.
