On 22 February 2023, the Financial Secretary of the Hong Kong Special Administrative Region, the Hon. Paul Chan Mo-po, delivered the 2023-24 Budget Speech.
Mr. Chan expects that Hong Kong would have a deficit of HK$139.8 billion for 2022-2023 and a deficit of HK$54.4 billion for 2023-24, but the fiscal reserves estimated at HK$983.7 billion by March 2028. This is the first Budget of the current-term Government and also the first to be presented since Hong Kong’s emergence from the epidemic and resumption of quarantine-free travel with the Mainland and the international community, thus the theme of the Budget is: Leaping Forward Steadily, Together We Bolster Prosperity under Our New Vision.
2023-24 Budget Highlights
We summarize the 2023-24 budget’s key highlights relating to salaries tax, profits tax, measures to smoothen livelihoods, support enterprises and achieve high quality development, as follows:
Smoothen livelihoods
- Issue HK$5,000 electronic consumption vouchers in two instalments to each eligible Hong Kong permanent residents and new arrivals aged 18 or above
- Salaries Tax and tax under personal assessment for 2022-23 will be reduced by 100%, subject to a ceiling of HK$6,000 (2021-22: HK$10,000). The reduction will be reflected in the final tax payable for the year of assessment 2022-23
- Increase the basic child allowance and the additional child allowance for each child born during the year of assessment to HK$130,000 (2022-23: HK$120,000) from the year of assessment 2023-24
Support Enterprises
- Profits Tax for 2022-23 will be reduced by 100%, subject to a ceiling of HK$6,000 (2021-22: HK$10,000). The reduction will be reflected in the final tax payable for the year of assessment 2022-23
- Waiver of rates for non-domestic properties for first two quarters of 2023-24, subject to a ceiling of HK1,000 per quarter.
- Starting from July 2023, granting 50 per cent rental or fee concession to eligible tenants of government premises and eligible short‑term tenancies and waivers under the Lands Department for six months.
- Extend the application period of all guarantee products under the SME Financing Guarantee Scheme from end‑June 2023 to end‑March 2024, thus giving SMEs more room to adjust and secure a firm footing.
- Launching new schemes to offer fully guaranteed loans for eligible passenger transport operators and licensed travel agents.
- Extend the Travel Agents Incentive Scheme, which is due to expire by end‑March 2023, for three months, with a view to facilitate speedy recovery of the industry; inject HK$30 million into the Information Technology Development Matching Fund Scheme for Travel Agents, with the aim of encouraging the industry to undergo upgrade and transformation by making use of technology.
Achieve High Quality Development
- Conduct a feasibility study on the development of an Artificial Intelligence Supercomputing Centre
- HK$500 million earmarked to launch a Digital Transformation Support Pilot Programme, to assist SMEs in applying ready-to-use basic digital solutions
- HK$200 million to enhance the operation of the “iAM Smart” platform to improve user experience
- Propose to provide tax deduction for the spectrum utilisation fees paid by telecommunications network operators which successfully bid for radio spectrum
- HK$50 million to expedite development of the Web3 ecosystem
- Set up a task force to advise on the sustainable development of the virtual asset industry
- Set up a Green Technology and Finance Development Committee to formulate an action agenda covering green technology, green finance, green standard certification, etc.
- Introduce a mechanism to provide facilitation for companies domiciled overseas for re-domiciliation to Hong Kong
- Introduce a new Capital Investment Entrant Scheme: applicants may reside and pursue development in Hong Kong after making investment at a certain amount in the local asset market, excluding property
- HK$3 billion earmarked to enhance basic research in frontier technology fields such as artificial intelligence and quantum technology
- Establish a Microelectronics Research and Development Institute to enhance collaboration among universities, R&D centres and the industry, expediting “1 to N” transformation
- Over HK$260 million reserved for Cyberport to nurture smart living start-ups
- The Hong Kong Science and Technology Parks Corporation will inject HK$400 million into its Corporate Venture Fund and inject an additional HK$110 million to launch the Co-acceleration Programme
- Conduct a feasibility study on setting up the second Advanced Manufacturing Centre
- Plan to issue no less than HK$50 billion of Silver Bond and HK$15 billion of retail green bonds in the next financial year
- Plan to earmark a certain proportion of the future issuances of Government green bonds and infrastructure bonds for priority investment by MPF funds
- Provide HK$100 million to InvestHK to attract more family offices to Hong Kong
- Extend the Pilot Insurance-linked Securities Grant Scheme for 2 years
- Introduce a listing regime for advanced technology companies in the first quarter of 2023
- Provide an additional funding of HK$550 million to the Hong Kong Trade Development Council to assist enterprises in opening up markets
- Inject HK$500 million into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) and expedite the processing of applications
- Allocate HK$100 million to the Hong Kong Productivity Council to strengthen assistance for SMEs in applying for government subsidies
- Introduce a “patent box” tax incentive to encourage the Innovation and Technology sector to create more patented inventions
Stamp Duty
- Current demand-side management measures for residential properties remain unchanged
- Adjust value bands of the ad valorem stamp duty payable for sale and purchase or transfer of residential and non-residential properties (Rates at Scale 2) to ease burden on ordinary families of purchasing their residential properties, particularly small and medium residential units.
Amount or value of the consideration (whichever is the higher) |
Rate |
|---|---|
|
Up to HK$3,000,000 |
HK$100 |
|
HK$3,000,000 to HK$3,528,240 |
HK$100 + 10% of the excess over HK$3,000,000 |
|
HK$3,528,241 to HK$4,500,000 |
1.5% |
|
HK$4,500,001 to HK$4,935,480 |
HK$67,500 + 10% of the excess over HK$4,500,000 |
|
HK$4,935,481 to HK$6,000,000 |
2.25% |
|
HK$6,000,001 to HK$6,642,860 |
HK$135,000 + 10% of the excess over HK$6,000,000 |
|
HK$6,642,861 to HK$9,000,000 |
3.00% |
|
HK$9,000,001 to HK$10,080,000 |
HK$270,000 + 10% of the excess over HK$9,000,000 |
|
HK$10,800,001 to HK$20,000,000 |
3.75% |
|
HK$20,000,001 to HK$21,739,120 |
HK$750,000 + 10% of the excess over HK$20,000,000 |
|
HK$21,739,121 and above |
4.25% |
Value of property |
Ad valorem stamp duty payable before adjustment of value bands (A) |
Ad valorem stamp duty payable after adjustment of value bands (B) |
Difference (A) - (B) |
|---|---|---|---|
|
HK$4,000,000 |
HK$90,000 |
HK$60,000 |
(HK$30,000) |
|
HK$5,000,000 |
HK$150,000 |
HK$112,500 |
(HK$37,500) |
|
HK$6,500,000 |
HK$230,000 |
HK$185,000 |
(HK$45,000) |
|
HK$8,000,000 |
HK$300,000 |
HK$240,000 |
(HK$60,000) |
|
HK$11,000,000 |
HK$412,500 |
HK$412,500 |
No difference |
CW welcome the Budget’s cautious and targeted measures when our economy is at the early recovery stage, when the public and enterprises need the easing of hardship after being weighed down by tremendous pressure. The measures also help to improve Hong Kong’s competitiveness in longer term.
Click here for a Summary of Hong Kong Taxes 2022-23 & 2023-24.
