The 2024 Hong Kong Budget focuses on economic revitalisation through ending residential stamp duties, boosting tourism, and offering substantial tax reliefs for individuals and SMEs.
The 2024 Hong Kong Budget Speech, delivered by Hong Kong Financial Secretary Paul Chan amid a backdrop of economic recalibration and post-pandemic recovery, outlines an ambitious framework aimed at revitalising the city’s financial and social landscapes.
The budget acknowledged the global economic challenges and local adversities, particularly the aftermath of the pandemic. The Financial Secretary underscored the government’s commitment to economic resilience, highlighting measures to stabilise and stimulate the economy, reduce unemployment, and bolster consumer confidence.
Housing Market Revitalisation and Property Reforms
Significant changes include the elimination of residential stamp duties, aimed at reinvigorating the housing market, benefiting both local and international buyers and potentially reshaping investment patterns.
Hong Kong has eliminated all demand-side management measures for residential properties, meaning transactions no longer require payment of Special, Buyer’s, or New Residential Stamp Duties. Additionally, stamp duties for transferring real estate investment trust units and the jobbing business of option market-makers have been waived.
Attracting Global Enterprises and Capital
New measures aim to attract businesses and capital, especially from the Asia-Pacific and Middle Eastern regions, enhancing Hong Kong’s stature as a financial nexus. Hong Kong is expanding its financial outreach beyond traditional Western markets to include Middle Eastern capital, highlighted by the launch of the region’s first ETF tracking Saudi Arabian stocks and the development of a Middle Eastern ETF tracking Hong Kong stocks. These initiatives, backed by the HKMA and various financial institutions, signify a new era of mutual market access and investment opportunities.
Comprehensive Support for SMEs
In a consolidated approach to support Small and Medium Enterprises (SMEs), the budget introduces loans, grants, tax reliefs, and enhanced tax deduction measures. Hong Kong extends the SME Financing Guarantee Scheme until March 2026 and injects $500 million into the BUD Fund, introducing “E-commerce Easy” to support e-commerce projects in Mainland China with up to $1 million per enterprise. Additionally, the Digital Transformation Support Pilot Programme will assist SMEs in the F&B and retail sectors with selecting and implementing ready-to-use digital solutions starting early this year.
There will be two enhancements for profits tax deductions: one for expenses on restoring leased premises to their original state, and another removing the time limit for allowances on industrial and commercial buildings, facilitating new owners to claim based on specific property factors. These changes are set to apply from the year of assessment 2024/25.
Relief Measures for Individuals and Businesses
Significant tax reductions for the fiscal year 2023/24 are set to provide relief to individuals and businesses, alleviating financial stress and fostering economic activity. Salaries tax and tax under personal assessment for the year of assessment 2023/24 will be reduced by 100%, up to a ceiling of $3,000, benefiting 2.06 million taxpayers. Corporate profits tax for year of assessment 2023/24 will also be reduced by 100%, up to a ceiling of $3,000.
Progressive Taxation Measures
Introducing a two-tier tax system, the budget addresses fiscal deficits by adjusting tax rates for high earners, aiming to balance revenue generation with maintaining an attractive financial hub status. Starting from the 2024/25 assessment year, the Budget proposes: the first HK$5 million taxed at 15% and any amount above at 16%, without impacting those taxed at progressive rates. No changes will be made to the progressive tax rates or marginal tax bands.
Fund re-domiciliation
Hong Kong has introduced fund re-domiciliation mechanisms for Open-ended Fund Companies and Limited Partnership Funds to encourage foreign funds to operate locally. A legislative proposal set for early 2024 will allow overseas companies, particularly from the Asia-Pacific region, to re-domicile in Hong Kong.
Boosting Tourism and Retail Sectors
Hong Kong to allocate over $1.09 billion to enhance tourism, including monthly pyrotechnic and drone shows at Victoria Harbour and thematic tours like “Citywalk”. The strategy also involves promoting youth-focused activities and continuing local cultural events, alongside launching a new tourism brand and encouraging regional tourism partnerships, supplemented by a $100 million fund to promote major events over the next three years.
Advancements in Technology and Innovation
Hong Kong’s Innovation and Technology initiatives for 2024 include launching the first phase of the AI Supercomputing Centre with a $3 billion allocation to support local entities, establishing the Hong Kong Microelectronics Research and Development Institute, and dedicating $6 billion for university-based technology research. Additional plans include setting up the Greater Bay Area International Clinical Trial Institute, launching a New Industrialisation Acceleration Scheme with funding up to $200 million, and supporting InnoHK research clusters and startups in Hetao with significant financial investments.
Looking Forward
The 2024 Hong Kong Budget Speech paints a picture of a government striving to balance economic development with social welfare and environmental sustainability. For businesses, residents, and policymakers, the budget offers both challenges and opportunities, underscoring the importance of adaptability, innovation, and collaboration in shaping Hong Kong’s future.
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