2015/16 Hong Kong Government Budget Highlights

Financial Secretary John Tsang delivered the eighth budget speech of his career on 25 February 2015. In it he announced a revised budget surplus for 2014/15 of HK$63.8 billion and a forecast surplus of HK$36.8 billion for next year. The budget proposals will need approval by the Legislative Council before taking effect.

Profits Tax

  • The profits tax rates for companies (16.5%) and unincorporated businesses (15%) remain unchanged.
  • Amend the tax law to allow, under specified conditions, interest deductions under profits tax for corporate treasury centres and a reduction in the profits tax rate for specified treasury activities of 50%.
  • Consider extending the scope of tax deduction for capital expenditure incurred on the purchase of intellectual property rights to cover more types of intellectual property rights as appropriate.

Salaries Tax

  • No change in the standard tax rate, marginal tax rates and marginal tax bands.
  • Increase the basic and additional child allowance in the year of birth from HK$70,000 to HK$100,000 each. After the increase, the total allowance for a child born in 2015/16 will be HK$200,000 for the year.
  • Provide tax concession for subscribers to regulated health/medical insurance products.

One-off Measures

  • Profits tax for 2014/15 to be reduced by 75% subject to a ceiling of HK$20,000, to be deducted from the taxpayer’s final tax payable for the year.
  • Waive 75% of salaries tax and tax under personal assessment for 2014/15, subject to a ceiling of HK$20,000, to be deducted from the taxpayer’s final tax payable for the year.
  • Waive rates for the first two quarters of 2015/16, subject to a ceiling of HK$2,500 per quarter for each rateable property.
  • Pay one month’s rent for the lower income tenants of public housing, excluding certain wealthier tenants and non-elderly tenants.
  • Provide two additional months of Comprehensive Social Security Assistance (CSSA) payment, Old Age Allowance, Old Age Living Allowance and Disability Allowance.

Others Points of Interest

  • Inject additional $400 million into the CreateSmart Initiative to support different sectors of the creative industries.
  • Earmark $23 million in the coming three years for offering intellectual property consultation, manpower training and other services to SMEs.
  • Having Hong Kong Science and Technology Parks Corporation (HKSTPC) earmark $50 million to set up a corporate venture fund for co-investment, on a matching basis with private funds, for start-ups, subject to certain conditions.
  • Issue “iBond” (i.e. inflation-linked retail bonds) worth up to HK$10 billion.
  • Set aside $50 billion to provide better retirement protection for the elderly in need.
  • Establish a Future Fund to serve as long-term savings. The fund will be placed in long-term investments for higher returns.
  • The 2015/16 Land Sale Programme will include 29 residential sites (of which 16 are new ones), four commercial/business sites and one site for hotel development.

Short-term Targeted Support Measures

  • Waive the licence fees for travel agents, hotels and guesthouses, restaurants, hawkers and operators with restricted food permits for six months.
  • Waive vehicle examination fee once for the renewal of vehicle licences of taxis, light buses, franchised and non-franchised buses, goods vehicles, trailers and special purpose vehicles within a year.

Support for Small and Medium Enterprises

  • Extend the application period for special concessionary measures under SME Financing Guarantee Scheme to 29 February 2016.
  • Inject $1.5 billion into the SME Export Marketing and Development Funds.
  • increase the maximum amount of funding support for each project under the SME Development Fund from $2 million to $5 million; and
  • expand the scope of the SME Export Marketing Fund.

Source: http://www.budget.gov.hk/2015/index.html