The Hong Kong Budget Address 2015-16
On the last Wednesday of every February, the Financial Secretary of Hong Kong, Mr. John Tsang, releases the Budget Address, covering the areas of taxation, investment, economic outlook, and strategic policies in Hong Kong. Here are the relevent highlights for our clients and partners:
- The government expects the average annual rate of economic growth to stay at 3.5% with an average inflation rate of 3% for 2016-2019.
- Tsang announced that profits tax, salary tax, and tax under personal assessment in 2014/15 will bereduced by 75% with a HKD 20,000 ceiling.
- The administration will increase efforts to combat cross-border tax evasion, in response to the Organisation for Economic Co-operation and Development (OECD).
- Furthermore, Tsang vowed to continue the active development and enhancement of the Shanghai-Hong Kong Stock Exchange and Offshore RMB business hub.
Though this year’s Budget Address offered limited changes, the Hong Kong government issued the new Companies Ordinance earlier this year, calling for all private limited companies to have at least one director who is a natural person. This significant change is in line with the recent global trend towards increased corporate transparency.
We believe Hong Kong will continue to play a significant role within the region. Despite the turbulence in late 2014, ties with China are still strong and will continue to grow, with agreements like the Double Tax Agreement highlighting this special relationship.
Headquartered in Hong Kong and with two offices in China, Fiducia offers the full coverage and service-depth in Greater China. If you would like to discuss your current business plans in Hong Kong and China or wish to find out further details, please contact us at email@example.com.
Below you can find further highlights from the Budget Address:
Economic Performance 2014 and Outlook 2015
To address the challenges in 2015 and foster diversified growth, Tsang suggested the following measures:
- Stronger support for small and medium sized enterprises, including an injection of $1.5 billion for the SME Export Marketing and Development Funds, as well as short-term waiving of license fees in catering, hotel and travel businesses.
- Strengthening of cultural and creative industries by injecting HKD 400 million.
- Continuation of the Enhance Self-Reliance Programme, a social entrepreneur initiative, by beginning a new phase in 2016/17.
To improve Hong Kong’s competitiveness and support the role of Hong Kong’s pillar industries, Tsang proposed the following:
- Strengthening ties to countries included in the One Belt One Road initiative by increasing Free Trade Agreements, promoting avoidance of Double Taxation, Investment Promotion, and Protection Agreements, and positioning Hong Kong as an important financial, commercial, and maritime centre globally and for China’s enterprises “going global”.
- Growing Hong Kong’s tourism footprint by working with Guangdong and Macau on multi-destination tourism projects, increasing activities on the Central Harbour front, opening of the Kai Tak Cruise Terminal and a possibly introducing Food Trucks, a popular trend abroad.
Employment and Ageing Population
The government will focus on overcoming the current limitations in sustainable development by:
- Encouraging employment by providing HKD 130 million to improve child care services, extending the Integrated Employment Assistant Programme, and encouraging employers to introduce flexible working arrangements.
- Improving healthcare by developing several new and existing hospitals.
Tsang suggested several relief measures worth HKD 34 billion to lift the financial burden on the public, increase consumption, and preserve employment:
- Property rates for the first two quarters of 2015/16 will be waived and capped at HKD 2,500.
- A two month additional allowance will be provided to recipients of Comprehensive Social Security Assistance and Old Age Allowance, Old Living Allowance, and Disability Allowance.
- Lower income tenants residing in Hong Kong Housing Authority units will receive a waiver of one month’s rent.
- Child allowances will be increased from HKD 70,000 to HKD 100,000 from 2015/16 onwards.
Looking into the Future
- The government’s overall fiscal position in the short to medium term stays healthy with an estimated HKD 949 billion in fiscal reserves by March 2020 totalling in 34% of the GDP.