2020/21 Hong Kong Budget

Revitalising Hong Kong's economy for greater success

Helping businesses and individuals stay ahead of the game, find out our commentary and analysis on this year’s budget. Join the discussion #HKBudget2020

Financial Secretary Paul Chan Mo-po announced the 2020/21 Hong Kong Budget on 26 February, outlining the Hong Kong SAR Government’s plan for the economy and proposals for taxation developments. Keep a close eye on Hong Kong’s fiscal health to stay ahead of the game. Find out from us what the budget means for you, your business and Hong Kong’s economy.

Commentary and analysis

A budget that promptly addresses a wide range of challenges

PwC welcomes one of the widest ranging Hong Kong budgets of recent years. While the Government has had some months to contemplate the impact of global trade tensions and social unrest, the unexpected coronavirus outbreak has added an extra degree of urgency to this year’s package. Financial Secretary Paul Chan is to be applauded for promptly producing a set of budgetary measures that address such a broad range of challenges.

The budget is also an affirmation of the fiscal prudence demonstrated by successive Hong Kong governments in preceding years. The city’s deep financial reserves have enabled a response that is unprecedented in both scale and scope.

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Budget at a glance

Revised forecast deficit of HK$37.8bn for 2019/20, and forecast deficit HK$139.1bn for 2020/21

100% government guaranteed low-interest loan for enterprise, with repayment period up to 3 years and only interest payment for first 6 months

Earmark about HK$50bn for the two 10-year Hospital Development Plans and increase spending for healthcare manpower

Earmark HK$3bn to take forward Phase 2 of the Science Park Expansion Programme

HK$10,000 cash payout to Hong Kong permanent residents aged 18 or above

Earmark HK$40m to subsidise short-term internships for students taking STEM programmes in local universities

Budget highlights

  • The two-tier profits tax rates for companies (8.25%/16.5%) and unincorporated businesses (7.5%/15%) remain unchanged.
  • Propose a tax concession for carried interest issued by private equity funds operating in Hong Kong subject to the fulfilment of certain conditions.
  • Explore other tax measures in addition to the proposed profits tax concessions for ship leasing business and marine insurance business to attract more global shipping business operators and commercial principals to set up business in Hong Kong.
  • Closely monitor and assess the OECD’s work in the international tax area, seek advice from stakeholders and devise corresponding measures to ensure Hong Kong’s tax regime is in line with the new international developments and remains competitive.

  • No change in the standard tax rate.
  • No change in the progressive tax rates and the marginal tax bands.
  • No change in the amounts of various personal allowances.

 

  • Propose to waive stamp duty on stock transfers paid by the Exchange Traded Fund (ETF) market makers when creating and redeeming ETF units listed in Hong Kong.

  • Waive 100% of profits tax for 2019/20, subject to a ceiling of HK$20,000.
  • Waive 100% of salaries tax and tax under personal assessment for 2019/20, subject to a ceiling of HK$20,000.
  • Waive rates for non-domestic properties for the four quarters of 2020/21, subject to a ceiling of HK$5,000 per quarter for the first two quarters and HK$1,500 per quarter for the remaining two quarters for each rateable non-domestic property.
  • Waive rates for residential properties for the four quarters of 2020/21, subject to a ceiling of HK$1,500 per quarter for each rateable property.
  • Waive the business registration fees for 2020/21.
  • Waive the registration fees for all company annual returns (except for late delivery) for two years.
  • Disburse HK$10,000 to each Hong Kong permanent resident aged 18 or above.
  • Provide one additional month of Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance and Disability Allowance. Similar arrangements will apply to recipients of the Work Incentive Transport Subsidy.
  • Pay one month’s rent for lower income tenants living in public rental units.
  • Pay the examination fees for school candidates sitting for the 2021 Hong Kong Diploma of Secondary Education Examination.

 

  • Introduce a concessionary low-interest loan with 100% Government guarantee for enterprises, with maximum loan amount of HK$2 million and repayment period of up to 3 years, and moratorium on principal repayment for the first six months.
  • Launch a HK$1 billion pilot scheme for fixed-rate mortgage loans for homebuyers, with a ceiling of HK$10 million per loan transaction.
  • Earmark about HK$500 billion for the two 10-year Hospital Development Plans and provide an additional HK$3.6 billion to the Hospital Authority to retain talents in the 5-year period starting from 2021/22.
  • Earmark HK$3 billion to take forward Phase 2 of the Science Park Expansion Programme.
  • Enhance the Technology Voucher Programme by increasing the grant ceiling to HK$600,000, raising the government’s funding ratio to 75% and increasing the maximum number of approved projects to six.
  • Provide additional funding of over HK$700 million for the Hong Kong Tourism Board to step up external promotion of Hong Kong.
  • Earmark HK$40 million to subsidise short-term internships for STEM graduates of local universities.
  • Earmark HK$7.1 billion for ex-gratia payment to vehicle owners under the scheme of phasing out Euro IV diesel commercial vehicles.
  • Earmark HK$1 billion for the Smart Traffic Fund to subsidise research and application on vehicle-related innovation and technology.
  • The 2020/21 Land Sale Programme will include 15 residential sites and six commercial sites.

Tax facts and figures

The information in this booklet is based on taxation laws and practices as of 26 February 2020 and incorporates legislative proposals and measures contained in the 2020/21 Hong Kong Budget announced on the same date.

Note: Legislative proposals do not become law until their enactment and may be modified by the Legislative Council before being enacted.

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Charles Lee

South China (incl. Hong Kong SAR) Tax Leader, PwC China

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Agnes Wong

Partner, PwC Hong Kong

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Jeremy Choi

Partner, PwC Hong Kong

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KK So

Partner - Tax Services, Asia Pacific Real Estate Tax Leader, PwC Hong Kong

+[852] 2289 3789

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David Smith

Senior Advisor, PwC Hong Kong

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