Hong Kong Budget to support economy during fifth Covid wave
Financial Secretary Paul Chan announced the Hong Kong 2022-23 Budget on 23 February, which includes spending plans worth over HKD170 billion (USD21.8 billion) to boost the economy and maintain public confidence amid the outbreak of the fifth wave of the Covid pandemic.
The Financial Secretary proposed a one-off reduction of profits tax for the year of assessment 2021-22 by 100%, subject to a ceiling of HKD10,000 (c, USD1,300) per case. This measure is designed to benefit 151,000 businesses and reduce government revenue by HKD1.2 billion.
No changes are proposed to tax rates of the profits tax. The two-tiered profits tax rates will remain at 8.25% on assessable profits for corporations up to HKD2 million and 16.5% above, and 7.5% on assessable profits for incorporated businesses up to HKD2 million and 15% above.
The Budget also proposed to provide tax concessions for eligible family investment management entities managed by single-family offices. The Financial Secretary said he would consult the sector on the detailed proposal and aim to submit legislative amendments to the Legislative Council (LegCo) during the current legislative session.
The Financial Secretary said the government would submit a legislative proposal to the LegCo in the second half of 2022 to implement the global minimum tax rate for large multinational enterprise (MNE) groups with global turnover of at least €750 million and other relevant requirements to implement the international tax reform proposals drawn up by the OECD to address base erosion and profit shifting (BEPS).
Hong Kong, he said, will also consider introducing a domestic minimum top‑up tax for MNEs, starting from the year of assessment 2024-25, to ensure that their effective tax rates reach the global minimum effective tax rate of 15% to safeguard Hong Kong’s taxing rights.
The Financial Secretary proposed to waive business registration fees for one year from 1 April 2022 to 31 March 2023. This measure will benefit 1.5 million business operators and reduce government revenue by HK$3 billion. The Hong Kong Government will introduce a legislative amendment to implement the measure as soon as possible.