Various measures have been introduced to support businesses and economy following COVID-19
With COVID-19 looming large over this year’s Hong Kong budget, the HK$120 billion package aimed at easing the financial burden on citizens and injecting new life into an economy affected by months of social unrest and an ongoing coronavirus crisis.
The Government has taken a number of steps aimed at boosting the economy and helping businesses, ranging from a reduction of taxes on profits, to loan concessions and employee support. Here are three areas one can look forward to:
- Profits and Salaries tax
The 2020-21 Budget provided a one-off reductions of salaries tax, tax under personal assessment and profits tax for 2019-20, by 100%, subject to a ceiling of HK$20,000. These reductions will be reflected in the taxpayers’ final tax payable for 2019-20. The proposals will benefit 1.95 million taxpayers as well as 141,000 tax-paying corporations and unincorporated business.
- Loan concession
In an effort to boost local enterprises in need of support, the Hong Kong Government is offering a low-interest concessionary loan under the SME Financial Guarantee Scheme, which will be open for application for 6 months. The Government will act as a 100% guarantor for third-party loans, subject to a cap of HK$2 million. The repayment period will extend to three years and the loan approval will be based on factors such as six-month rental expenditure and salary. The period of time where the borrower is not required to make repayment (called the optional principle moratorium) will operate for the first six months where only interest payments will need to be made.
- Easing business conditions
Business registration fees will be waived for the year 2020-21and the registration fees for all annual returns charged by the Companies Registry will be waived for two years (note that this will not include late delivery charges). Additionally, in a move set to benefit the retail and office sector, the Government is waiving rates for non-domestic properties for four quarters of 2020-21, subject to a ceiling of HK$5,000 per quarter in first two quarters and HK$1,500 per quarter for remaining two quarters;
Other employees support measures include a HK$30 million fund set aside to encourage businesses to hire elderly, young and those with disabilities, major aid packages for industries affected by the COVID-19 virus such as tourism agencies and F&B, and subsidies for non-resident electricity charges.
For more information on the Hong Kong budget and guidance on doing business in Hong Kong, contact Alpadis Group