Financial Chief Paul Chan delivered the Hong Kong budget 2020 speech amidst social and economic uncertainties and a record financial deficit. In this article, we look at the key takeaways from the speech. Here is Hong Kong’s top 10 budget 2020 information that you should know.
The economic deficit started in Hong Kong in early 2019, with US-China trade conflicts, and then anti-government protests now, the Coronavirus. Helping its people, the government has decided that every Hong Kong and citizen will get a relief package of HK $10,000. This is for assisting with their household budget in the slumping economy and keeping jobs and companies intact.
The government will also provide one additional month of Old Age Allowance, Old Age Living Allowance, and Comprehensive Social Security Assistance payments. The same goes for Disability Allowance and the Work Incentive Transport Subsidy.
There will be profit, salary, and personal tax reduction of 100% for the year of assessment 2019/20, capped at HK $20,000 per case. For salary tax, the ceiling is for every individual taxpayer. For the married couples who jointly pay the tax, the cap is $20,000 in total, i.e., the couple can get $20,000 in rebates and not individuals.
For people who pay both salary and profit tax can get reductions for both. On the other hand, if someone has a business profit or a rental income and pays the personal assessment tax, the cut will be on a case by case basis.
The tax this year favoured the Hong Kong police, making the fact another among Hong Kong’s top 10 budget 2020 information.
The budget proposal speech of Financial Secretary Paul Chan included boosting the police personnel by 2,543 in the coming year. This will cost the region HK$21.9 billion. Also, the total financial support for the force is HK $25.8 billion this year, including the crowd control gear and pieces of equipment.
Even if the police have been busy last year amidst the social unrest, pro-democrats have bashed it, with the force getting support despite there being a lot of claims of police brutality.
This year, companies registering between 1 April 2020 to 31 March 2021 (Waiver period), will not need to pay their registration fees. Anyway, the registration is not entirely free, as companies will still need to pay a levy for the Protection of Wages on Insolvency Fund.
This move from the government is expected to benefit at least 1.5 million business owners as well as business buyers and sellers, with all of them saving collectively around HK $3 billion. Moreover, the company registration fees for annual taxes will also be waived for two years. This, on the other hand, will benefit 1.4 million companies and will cost the government HK $212 million.
Every enterprise under the SME Financing Guarantee Scheme will get a low-interest loan of up to HK $2 million.
This decision is to help SMEs, especially those affected by the coronavirus outbreak, for example, travel agents, restaurants, cinemas, transport operators, etc. The loan is 100% guaranteed; however, for this, the company should be running for at least three months and should have suffered a 30% decline in sales turnover since February 2020.
All the loans will amount to HK $20 billion in total. The interest is Prime Rate – 2.5% per year.
With the threat of Coronavirus being more severe day by day, it was only natural to expect the Hong Kong government to spend quite a lot in healthcare. The government has decided to provide recurrent funding of HK $75 billion to the Hospital Authority in the year of assessment 2020-21, which is 35% more than the $55.6 billion they did in the 2017-18 year of assessment.
Every public hospital in the region will get an extra HK $3.6 billion to improve staff retention, their services, and also the research. Furthermore, the health institutions coping directly with the Coronavirus epidemic will get HK$975 million.
To make a living in Hong Kong better, water costs will be discounted by 75% with a cap of HK$20,000. Furthermore, people from the region will also get a 75% discount on sewage costs with a cap of HK $12,5000. This move from the government is going to set them back around HK $340 billion.
Also, non-domestic electricity accounts will get a 75% discount on their billing, and in this case, the cap is HK$5,000 for four months. Furthermore, the government will provide local recycling firms with a rental subsidy for six months.
Anyway, electricity bills will increase by up to 5.2% in 2020.
The budget 2020 will waive rates for non-domestic properties for four quarters of 2020-21. The maximum per quarter is HK$5,000 for the first two and $1,500 per quarter in the next two quarters. There will be a cash payout for the discount amount.
The same goes for residential properties, but the ceiling will be $1,500 per quarter for all quarters.
Talking more about this, government property tenants, government land, and Ecopark will get rest discounts of 50%. Also, the rates and fees for operators of the eligible property will reduce by 50%. Besides, the government will pay a month’s rent for lower-income tenants in public rental units.
There is a proposal to introduce an HK $1 billion pilot scheme for fixed-rate mortgage loans with a maximum of HK$10 million per transaction. The 2020/21 Land Sale Program will include 15 residential and six commercial sites.
Around HK $3 billion has been designated to take forward phase 2 of the Science Park Expansion Program. The grant ceiling for the Technology Voucher Program will increase to HK$600,000, which makes the government’s funding ratio of 75%. There will be a maximum of six project approvals from now.
The Hong Kong Tourism Board will receive additional funding of HK $700 million for international promotions. HK$40 million has been subsidized for giving short-term internship opportunities for STEM graduates of local universities. HK $1 billion will be put in Smart Traffic fund for vehicle-related innovations.
The budget 2020 came amidst economic uncertainties, especially because of the protests and the coronavirus outbreak. In the 2019-20 fiscal year, the deficit (the amount of spending exceeding income) was HK37.8 billion. This was the city’s first fiscal deficit in 15 years.
In the year 2020-21, the amount is set to hit a record of HK $139 billion. Mr.Chan in his budget clarified that even if such deficit is going to take place, the big-budget was the only way to help local communities and enterprises.
Well, these were our top 10 budget information 2020 for Hong Kong. You can contact us if you have any inquiries regarding it, and also reach out to us for the number one corporate services agency in Hong Kong.