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Mazars: Hong Kong Budget 2022-23
The Financial Secretary, Mr Chan Mo-Po (“Mr Chan”), delivered the 2022-23 Hong Kong budget on 23 February 2022.
Having regard to the emergence of COVID-19’s variants and the uncertainties over the global economic outlook, Mr Chan continued to adopt an expansionary fiscal policy in preparing the 2022-23 Budget with the objective of relieving the hardship of people and small and medium-sized enterprises and paving the way for the post-pandemic economic recovery.
Mr Chan forecasted the fiscal surplus of $18.9 billion for the financial year (“FY”) 2021-22, after taking into account of the proceeds from the issuance of green bonds. This contributed an increment in fiscal reserves to $946.7 billion by the end of March 2022. The fiscal surplus for FY2021-22 was mainly due to the combined effect of higher revenue from land premium and profits tax and lower operating expenditure.
Similar to last year’s budget, there will be a reduction of final profits tax, salaries tax and tax under personal assessment for 2021-22 by 100%, subject to a ceiling of $10,000.
For relieving people’s hardship, Mr Chan proposed the introduction of a tax deduction for domestic rental expenses of $100,000 starting from 2022-23. In order to promote family office business and maritime business, he also proposed to provide tax concessions for eligible family investment management entities and half-tax concession to attract more maritime enterprises to establish a presence in Hong Kong.
With an aim of boosting the market sentiment, stimulating local consumption, and speeding up economic recovery, Mr Chan proposed to implement a new round of consumption voucher scheme, under which electronic consumption vouchers with a total value of $10,000 will be disbursed by instalment to each eligible Hong Kong permanent resident and new arrival aged 18 or above through suitable stored value facilities.
With respect to international tax co-operation, the government will preserve the advantages of Hong Kong’s tax regime including our territorial source principle of taxation. The government plans to submit proposal to Legislative Council (“LegCo”) to implement the global minimum tax rate and other relevant requirements and to introduce a domestic top-up tax to ensure the MNEs’ effective tax rate reach 15 per cent, i.e. the global minimum effective tax rate, so as to safeguard Hong Kong’s taxing rights.
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