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Hong Kong 2024-25 Budget: Things you don't want to miss

Hong Kong 2024-25 Budget: Things you don't want to miss


Measures include attracting talent, enterprises and capital; as well as supporting talent development and SMEs, and tax reduction.

Hong Kong's Financial Secretary Paul Chan delivered the 2024-25 Budget at 11am today (28 February 2024, Wednesday) at the Legislative Council.

Themed "Advance with Confidence. Seize Opportunities. Strive for High‑quality Development.", Chan has revealed earlier that the colour of this year’s Budget is soft peach, which he described as "the colour of dawn", reflecting the hopes for the gradual improvement of Hong Kong's economy in the year to come, as well as for the sustained improvement in the business environment for various sectors.

Chan indicated that Hong Kong's labour market continued to improve. The seasonally adjusted unemployment rate declined from 3.5% in the fourth quarter of 2022 to the latest 2.9%. The median monthly employment earnings of full-time employees increased 8.6%, year-on-year, in the fourth quarter of last year.

Amid the complicated and ever-changing international, economic and social environment, Chan said Hong Kong's economic outlook remains bright. In the short run, the Government has put in place a series of measures to showcase Hong Kong's appeal to people from around the world, empowering individuals and enterprises to seize every opportunity. Meanwhile, the Government will continue to roll out policies and initiatives on all fronts, drawing in capital, enterprises and talent, expanding the city's economic capacity and strengthening its impetus for development.

Here we elaborate the policies and development relevant to businesses and HR leaders.

Note: All currencies stated below are in Hong Kong dollars (HKD).

Pooling talent from the Mainland and overseas

Hong Kong has rolled out a number of measures in recent years, including the Top Talent Pass Scheme (TTPS), to trawl for talent. The Labour and Welfare Bureau will review various talent admission schemes in the middle of this year to ensure the competitiveness of these measures and their effectiveness in addressing the city's manpower demand.

On the other hand, the Hong Kong Talent Engage (HKTE) is committed to attracting talent from the Mainland and overseas, providing one-stop support services to help them settle here.

The HKTE will organise a Global Talent Summit and the Guangdong‑Hong Kong‑Macao Greater Bay Area High‑quality Talent Development Conference in May, aiming to promote Hong Kong's advantages as an international talent hub and enable the flow of talent among the cities of the GBA.

Nurturing local talent

Apart from supporting post-secondary institutions to enhance their quality and expand their capacity, the Government will continue to take forward a number of sector-specific talent training programmes to enrich the local talent pool.

1. I&T talent

  • Implemented the STEM Internship Scheme to encourage university students to participate in I&T-related work
  • Launched a "Knowing More About IT" Programme to enhance primary school students' interests in information technology and its applications
  • Proposing to allocate an additional funding of $134mn for the provision of subsidies of up to $300,000 for each publicly-funded primary school in the next two academic years

2. Healthcare professionals

  • Continuing to enhance healthcare‑related teaching facilities, increasing the number of local training places as appropriate, and having starting to subsidise the relevant institutions in respect of the clinical practicum training fees for their specified healthcare‑related programmes since last April
  • An additional injection of $500mn into the Chinese Medicine Development Fund in last year's Budget has been taking a number of capacity building initiatives for the industry forward, such as the Hong Kong Chinese Medicine Talent Short‑term Training Programme co‑organised with the National Administration of Traditional Chinese Medicine

3. Maritime and aviation talent

4. Patent talent

  • Allocating an additional funding of about $12mn in total to the Intellectual Property Department (IPD) over the next three years, to prepare for the introduction of regulatory arrangements for local patent agent services
  • Continuing to strengthen and enlarge its patent examiner team and enhance its substantive examination capability, with a view to acquiring institutional autonomy in conducting substantive patent examination in 2030

5. International legal talent

  • The Department of Justice (DoJ) will set up a dedicated office and an expert group this year to take forward the establishment of the Hong Kong International Legal Talents Training Academy

Supporting youth and women's development

The Government is actively implementing the various actions and measures set out in the Youth Development Blueprint in phases, and opening up more Mainland and overseas exchange and internship opportunities for young people, with a target to benefit no less than 30,000 youths this year.

The Government will also organise the Youth Development Summit in mid this year, anticipating more than 1,000 participants.

The Government has set aside some $680mn to support the Vocational Training Council to continue enhancing vocational and professional education and training (VPET). Initiatives include extending the Pilot Incentive Scheme to Employers and the Pilot Subsidy Scheme for Students of Professional Part-time Programmes for five years, as well as stepping up support for student-exchange activities, strengthening assistance to students with special educational needs, and encouraging employers to provide workplace learning opportunities etc.

Furthermore, the Government has also set aside a start-up fund of $100mn to support self-financing, post-secondary institutions in forming an Alliance of Universities in Applied Sciences for joint publicity and promotion of VPET.

Regarding women's development, the Government has set aside $100mn last year to strengthen support for the relevant work. The Women Empowerment Fund, established in June 2023, has so far provided funding support to women's organisations and non‑governmental organisations for launching over 140 projects for purposes such as helping women assume different roles in the job market and providing them with training on child and elderly care.

Starting this year, the Government will set up 10 more aided, standalone child-care centres, in phases. The target is to provide nearly 900 additional places for child day-care services within three years. The Government will also extend the After School Care Programme for Pre‑primary Children in phases, starting this year, to cover all districts in Hong Kong. The number of service places will increase to nearly 1,200 within three years.

Attracting enterprises and capital on all fronts

Ten-plus strategic enterprises have either confirmed setting up or expanding their businesses in Hong Kong. The companies will sign a partnership agreement with the Office for Attracting Strategic Enterprises (OASES) next month. Together with the 30 companies from the first batch, they are expected to bring about over $40bn in investment to Hong Kong, creating about 13,000 jobs over the next few years.

On the other hand, the first batch of direct investment and co‑investment projects consolidated by the Hong Kong Investment Corporation Limited (HKIC) will be implemented in the first half of this year, covering areas such as life technology, green technology and finance, semi‑conductors and chips, as well as the upgrading and transformation of manufacturing industries. The HKIC will also encourage enterprises in its investment portfolio to engage more actively in local, Mainland and overseas I&T networks, where they can explore more development opportunities, while identifying potential investors and their target clientele.

The HKIC will host a Roundtable for International Sovereign Wealth Funds. Sovereign wealth funds and financial leaders will be invited to explore investment opportunities and develop collaborative partnerships. A Summit on Start-up Investment and Development in Hong Kong will also be organised. It will bring together prominent figures in the start-up ecosystem, with a view to support I&T enterprise development at varying stages.

Hong Kong has also already taken the first step by putting in place user‑friendly fund re-domiciliation mechanisms for Open-ended Fund Companies and Limited Partnership Funds to attract existing foreign funds to establish and operate in Hong Kong. In the first half of 2024, the Government will submit a legislative proposal enabling companies domiciled overseas, especially enterprises with a business focus in the Asia-Pacific region, to re-domicile in Hong Kong.

Assisting small and medium enterprises (SMEs)

To assist SMEs in tackling their capital-flow problems, the Government will extend the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme for two years to the end of March 2026. The total guaranteed commitment under the Scheme will increase further by $10bn.

SMEs in the food and beverage industry and the retail industry will be invited to select suitable options among ready‑to‑use basic digital solutions and apply for subsidies on a matching basis early this year under the Digital Transformation Support Pilot Programme (DTSPP). The solutions will focus on three areas: digital payment and shopfront sales, online promotion and customer-management solutions. It is expected that at least 8,000 eligible SMEs will benefit from the pilot programme.

Chan also proposed to inject $500mn more into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) to help SMEs boost their competitiveness and tap into Mainland and overseas markets. This includes the launch of "E‑commerce Easy" under the fund. It will provide support of up to $1mn per enterprise for implementing e‑commerce projects in the Mainland.

Tax adjustments

To relieve the economic pressure faced by some industries and the people, the Government will introduce the following tax reduction measures after considering its financial position this year:

  • Provide rates concession for domestic properties for the first quarter of 2024/25, subject to a ceiling of $1,000 for each rateable property. This measure is estimated to involve 3.08mn domestic properties.
  • Provide rates concession for non‑domestic properties for the first quarter of 2024/25, subject to a ceiling of $1,000 for each rateable property. This measure is estimated to involve 430,000 non‑domestic properties.
  • Reduce salaries tax and tax under personal assessment for the year of assessment 2023/24 by 100%, subject to a ceiling of $3,000. The reduction will be reflected in the final tax payable for the year of assessment 2023/24. This measure will benefit 2.06mn taxpayers.
  • Reduce profits tax for the year of assessment 2023/24 by 100%, subject to a ceiling of $3,000. The reduction will be reflected in the final tax payable for the year of assessment 2023/24. This measure will benefit 160,000 businesses
  • Cancel all demand-side management measures for residential properties with immediate effect, that is, no Special Stamp Duty (SSD), Buyer's Stamp Duty (BSD) or New Residential Stamp Duty (NRSD) needs to be paid for any residential property transactions starting from today.
  • Introduce two enhancement measures for deduction of expenses under profits tax. Profits-tax payers will be granted tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition. As regards the allowances for industrial buildings and structures as well as commercial buildings and structures, the time limit for claiming the allowances will be removed. This will allow the new owner to claim allowances for the property after a change of ownership, subject to factors such as the construction cost of the property and the balancing charge of its previous owner. Both enhancement measures will take effect from the year of assessment 2024/25.

On the other hand, to boost public revenue while at the same time maintaining the competitive edge of the simple and low tax regime, Chan has also outlined the following measures in the Budget:

  • Proposing to implement a two‑tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. In calculating the amount of tax for taxpayers whose net income exceeds $5mn and whose salaries tax or tax under personal assessment is to be charged at a standard rate, the first $5mn of their net income will continue to be subject to the standard rate of 15%, while the portion of their net income exceeding $5mn will be subject to the standard rate of 16%. It is expected that about 12,000 taxpayers will be affected, accounting for 0.6% of the total number of taxpayers chargeable to salaries tax and tax under personal assessment. The government revenue will increase by about $910mn each year.
  • Introducing legislative amendments in the first half of this year to implement the progressive rating system for domestic properties with rateable value over $550,000, aiming to bring the system into effect from the fourth quarter of 2024‑25 onwards. The new system will account for about 1.9% of the relevant properties, estimated to contribute to an increase of about $840mn in government revenue annually.
  • Business registration fees will increase by $200 to $2,200 per annum with effect from 1 April 2024.
  • Proposing to resume the collection of the Hotel Accommodation Tax (HAT) at a rate of 3% effective 1 January 2025. It is anticipated that government revenue will increase by about $1.1bn per annum. The HAT to be collected is estimated to only account for less than 1% of the total spending of overnight visitors in Hong Kong.
  • Applying the global minimum tax rate of 15% on large multinational enterprise groups with an annual consolidated group revenue of at least EUR750mn and impose the Hong Kong minimum top‑up tax starting from 2025. The Government is now conducting consultation on the implementation of the above proposals and expect to submit a legislative proposal to LegCo in the second half of this year. It is estimated that these proposals will bring in tax revenue of about $15bn for the Government annually starting from 2027‑28.

Images: 2024-25 Budget LiveFinancial Secretary's website

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