2019-20 Hong Kong Government Budget – Tax Measures
The Financial Secretary Paul Chan announced the 2019/20 Hong Kong budget on February 27 2019, outlining the government’s plan for the economy and its proposals for changes to taxation.
Chan forecasts a healthy surplus of HK$58.7 billion ($7.4 billion) for 2018-19. Overall, the government expects to have fiscal reserves of HK$1,161.6 billion by March 31 2019, in addition to maintaining this solid position over the next five years.
As expected, livelihood issues were a main focus, and included tax rebates and targeted welfare measures. Most sectors have benefited in some way from the budget, with the financial services sector and the innovation and technology industry as the biggest winners.
That said, education is the single largest area of government expenditure, and should perhaps have received greater attention. In a recent KPMG survey on smart cities, key priorities that respondents identified included strengthening education and developing a future-focused workforce.
The following tax changes were implemented:
- A reduction of 75% in profits tax payable for 2018/19, subject to a ceiling of HK$20,000;
- Continued commitment to enhance tax concessions related to qualifying corporate treasury centres;
- Consider establishing a limited partnership regime and introducing tax arrangements to attract private equity funds to set up and operate in Hong Kong;
- Provide a 50% tax concession to marine insurance business; and
- Consider introducing tax and related measures to attract ship finance companies to develop ship financing businesses in Hong Kong.