On February 24 2021, monetary secretary Paul Chan Mo-po introduced the 2021-22 Hong Kong SAR Price range outlining the federal government’s plan for the economic system and proposals for taxation developments.
Hong Kong SAR has reported an unprecedented price range deficit of HK$257.6 billion (roughly US$33.2 billion) for the 2020-21 fiscal yr, the biggest deficit in 20 years. That is primarily as a result of one-off pandemic aid measures granted prior to now yr. Nonetheless, even with this deficit, Hong Kong SAR fiscal reserves stays sturdy at an estimated HK$902.7 billion as at March 31 2021. This clearly demonstrates the underlying energy of the Hong Kong SAR authorities’s books and economic system basically.
Whereas the one-off assist measures are diminished from final yr, the federal government’s price range (the Price range) will proceed to offer a lot wanted help to these affected by the continuing COVID-19 pandemic. It’s pleasing to see that the federal government has adopted KPMG’s proposed measure of issuing digital consumption vouchers to Hong Kong SAR everlasting residents. This might be an efficient and focused measure to assist enterprise areas which were most affected by the pandemic, and on the similar time, promote Hong Kong SAR as a wise metropolis.
Whereas no new taxes have been launched on this yr’s Price range, the federal government proposed growing the stamp obligation on inventory transfers. Given the town’s strong capital markets and anticipated elevated IPO exercise within the coming months, that is anticipated to boost extra income of HK$12 billion.
Nonetheless, it will be important for Hong Kong SAR’s capital markets to remain aggressive with its world friends, a lot of that are trending in direction of lowering or eradicating such duties. The impression of those measures must be stored beneath overview given the continuing challenges and uncertainties within the world economic system. The monetary secretary additionally introduced that this isn’t the time to introduce new taxes. The introduction of future taxes ought to all the time be executed with cautious overview contemplating the long-term income wants and with as a lot consensus as attainable with the neighborhood.
The continued deal with strengthening Hong Kong SAR’s place as a world monetary centre and a wealth and asset administration hub can be welcomed, particularly measures to assist inexperienced finance and the event of related tax measures to assist the expansion of household places of work in Hong Kong SAR.
The Price range additionally proposed varied investments supporting the event of expertise and innovation throughout a number of sectors to be able to alter to post-pandemic realities. Because the pandemic continues to reshape Hong Kong SAR’s economic system, the federal government ought to contemplate extending extra assist to workers of pandemic-affected industries for re-training and abilities improvement.
In abstract, this yr’s Price range considerably follows previous years’ blended bag of measures and sweeteners designed to handle a variety of expectations from most of the people. It’s hoped that the federal government will launch the implementation particulars rapidly to assist Hong Kong SAR transfer additional alongside the highway to restoration.
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