Hong Kong Budget 2021-22 Highlights
The Finance Secretary of Hong Kong, Paul Chan Mo-po, presented the Budget for 2021-22 on February 24, 2021. As mentioned in the Budget Speech, Hong Kong’s economy recorded a negative growth of 6.1% with the unemployment rate at 7% in the past year. The Government of the Hong Kong Special Administrative Region has provided nearly HKD 300 billion for stabilizing the economy, which has brought Hong Kong’s fiscal deficit to a record high.
As per the Budget 2021-22, key rates are unchanged – There are no changes proposed in Corporate Income Tax (Profit Tax) rates, salaries tax rates and personal allowances.
The highlights of the budget 2021-22 are:
- A reduction of 100% salary tax payable and tax payable under personal assessment for the year of assessment 2020-21, subject to a ceiling of HKD 10,000 per annum. This means that no tax is payable for salary up to HKD 10,000 and salary above HKD 10,000 will get deduction of HKD 10,000. This reduction will be reflected in the final tax payable for the year of assessment 2020-21.
- Rates concession will be given to all rate payers to offset the rates payable for four quarters from April 2021 to March 2022. For each domestic rateable tenement, the ceiling will be $1,500 per quarter for the first two quarters (April 2021 to September 2021) and $1,000 per quarter for the following two quarters (October 2021 to March 2022). No payment will be required for the quarter if the quarterly rates payable do not exceed the corresponding rates concession ceiling.
- Grant of a subsidy of HKD 1,000 to each residential electricity account.
- For 2021-22 year, there is no change in allowances for individuals like personal and child allowances, dependent parent and grandparent allowances. These are the same as provided for 2020-21.
- The Government proposes relaxation of the working hour requirements under the Working Family Allowance Scheme. The current basic working hour requirement of not fewer than 144 hours per month for non-single parent households will be substantially lowered by half for one year. It is subject to Finance Committee’s (FC) approval.
- It is proposed to set up a Special 100% Loan Guarantee for Individuals Scheme to provide an extra financing option for the unemployed. Under this scheme, the Government of Hong Kong proposes to offer a guarantee for loans. The maximum loan amount per applicant is set at 6 times his/her average monthly income during employment, subject to a ceiling of HKD 80,000. There will be a principal moratorium for the first 12 months. Repayment of principal and interest will be over a period of up to 5 years with an interest rate fixed at 1% per annum. The Financial Services and the Treasury Bureau (FSTB) will provide details in due course.
- There is an increase in the rate of ad valorem stamp duty from 0.1% to 0.13% of the consideration or value of each transaction of Hong Kong stock payable by buyers and sellers, respectively.
- There will be an issue of electronic consumption vouchers in installments with a total value of HKD 5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above, in order to encourage and boost local consumption.
- In order to continue to relieve the cash flow pressure of small and medium enterprises (SMEs), the period in which an application can be made for the Special 100% Guarantee Product has been extended until the end of 2021. This scheme aims to alleviate the burden of paying employee wages and rents by small and medium-sized enterprises (SMEs) which are suffering from reduced income. Other changes to the scheme as per Budget 2021-22 are:
– Increase in the maximum loan amount per enterprise from the total amount of employee wages and rents for 12 months to that for 18 months.
– Increase in the loan ceiling from HKD 5 million to HKD 6 million.
– Extension to the maximum repayment period from 5 years to 8 years; and
– Extension to the maximum duration of principal moratorium from 12 months to 18 months.
- Reduction of 100 % Corporate Income Tax (CIT) for assessment year 2020-21, subject to a ceiling of HKD 10,000 per annum. This reduction will reflect in the final tax payable for the assessment year 2020-21.
- Rates concession will be given to all rate payers to offset the rates payable for four quarters from April 2021 to March 2022. For each non-domestic rateable tenement, the ceiling will be $5,000 per quarter for the first two quarters (April 2021 to September 2021) and $2,000 per quarter for the following two quarters (October 2021 to March 2022). No payment will be required for the quarter if the quarterly rates payable do not exceed the corresponding rates concession ceiling.
- Waiving the business registration fees for 2021-22.
- Waiving of 75% of the water and sewage charges payable by non-domestic households for 8 months starting from April 2021, subject to a monthly ceiling of HKD 20,000 and HKD 12,500 respectively per non-domestic household.
- The Government will continue to grant the 75% rental or fee concession to eligible tenants of government properties and eligible short-term tenancies and waivers under the Lands Department for 6 months starting from April 2021.
- Budget highlights that were announced in November 2020, the Pre-approved Principal Payment Holiday Scheme would be extended for 6 months until April 2021. Under the Scheme, banks in Hong Kong offer principal payment holidays to covered corporate borrowers on a pre-approval basis.
- By mid-2022, unless there are legal or operational constraints, all government forms and license applications can be submitted electronically.
- The Hong Kong Monetary Authority (HKMA) is currently working with the Office of the Government Chief Information Officer (OGCIO) to develop the business version of the “iAM Smart” digital authentication platform. It can be used to authenticate the identity of enterprises through an electronic channel.