The Hong Kong Budget Address 2016-17
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 relevant, positive highlights for our clients and partners:
- Profits tax, salary tax, and tax under personal assessment in 2015/16 will remain at a reduction of 75% with a HKD 20,000 ceiling.
- Basic allowance for personal tax assessment will be raised to HKD 132,000.
- The Business Registration Fee for 2016/2017 will be waived.
- The government expects the average annual rate of economic growth to drop to 1-2% with an average inflation rate of 3% for 2016-2019.
We believe Hong Kong will continue to play a significant role within the region. Despite the turbulence in early 2016, ties with China are still strong and will continue to grow, which is best exemplified by measures such as Hong Kong’s participation in the One Belt, One Road Initiative.
For a detailed analysis of this year’s measures, click here.
Below you can find further highlights from the Budget Address 2016:
Economic Performance 2015
Exports slowed in the Asian markets due to setbacks in the global economy in 2015, resulting in a decline in the exports of goods at -1.7% and services at -0.9% for the first time since 2009. However, domestic demand fostered economic growth in Hong Kong reaching up to 2.4%. The unemployment rate was at 3.3% and inflation dropped to a headline inflation of 3%.
Support for SMEs
The 320,000 SMEs who employ about 50% of the private sector workforce will benefit from a deduction in profit tax of 75% (subject to ceiling of HKD 20,000). Furthermore, the Hong Kong government will waive business registration fees for 2016/17.
To further stimulate tourism in Hong Kong, license fees for 1,800 travel agents, 2,000 hotels and 27,000 restaurants will be waived. Also, food trucks will be introduced to Hong Kong.
The Hong Kong government aims to boost local consumption with the following relief measures:
- Citizens will continue to enjoy a salaries tax and tax under personal assessment reduction by 75% (subject of ceiling of HKD 20,000)
- Social security recipients will receive an extra allowance
- Property rates will be waived for four quarters
- Married couples will enjoy a raised basic allowance of up to HKD 264,000 in their 2016/17 personal tax assessment
- Single persons will enjoy a raised basic allowance of up to HKD 132,000 in their 2016/17 personal tax assessment
In the “New Economic Order” where the East and emerging markets play a stronger role in the global economy, Hong Kong sees a variety of opportunities for both traditional and emerging industries with a lower threshold for start-ups and an open market ecosystem. In order to increase capacities in emerging industries, Hong Kong plans to nurture innovation in the following sectors:
- Application of R&D by continuing to further establish a smart city, promote healthy ageing, and launch robotics programs
- FinTech capabilities by offering financial support, co-working space in Cyberport and FinTech training camps for students
- Support of start-ups by the launch of a fund to invest in local technology startups and expansion of the Science Park
Finding New Markets
Tsang emphasised that Hong Kong must act quickly in identifying new trade opportunities to bolster its involvement in the following segments:
- One Belt, One Road
- Trade and Logistics
- Financial Services
Headquartered in Hong Kong and with four offices in Greater China, Fiducia offers full coverage and service-depth. If you would like to discuss your current business plans in the region or wish to find out further details, please contact us anytime by email at email@example.com.