Hong Kong SAR Budget 2020/2021
The Financial Secretary for the Hong Kong Special Administrative Region (HKSAR), Mr. Paul Chan, has delivered his fourth budget on Wednesday, 26 February 2020.
Our coverage includes a commentary and analysis in response to the Budget prepared by the Deloitte Hong Kong Budget Team, led by Ms. Sarah Chan, Tax Partner of Deloitte China, and a summary highlighting the key proposals.
Hong Kong budget conservative yet practical amid economic uncertainty and reduced government revenue
On 26 February 2020, Financial Secretary Paul Chan Mo-po presented his fourth budget speech against the backdrop of a significant budget deficit for the first time in 15 years, as well as uncertainty over the city’s economic downturn due to the coronavirus outbreak. He introduced a raft of relief measures to support the economy, which has also been affected by China-US trade tensions and social unrest.
Summary of Tax Measures
Hong Kong Tax News
Issue 115 - 26 February 2019
Financial Secretary of the Hong Kong Special Administrative Region, Mr. Paul Chan Mo-po, delivered the 2020/21 budget speech this morning. A deficit of $37.8 billion for 2019/20 is expected and fiscal reserves to reach $1,133.1 billion by 31 March 2020. This Tax Newsflash summarized the major proposals with respect to tax for individual and business.
- Tax concessions / Relief measures
- Arrangements to stimulate economy and business
- Developing a diversified economy
The Financial Secretary for the Hong Kong Special Administrative Region (HKSAR), Mr. Paul Chan Mo-po, delivered his 2020-21 Budget speech today. This is the fourth budget prepared by Chan since his appointment as Financial Secretary.
Chan announced the first fiscal deficit since 2003-04 for the financial year (FY) 2019-20 amid various headwinds, including prolonged social unrest, the US-China trade friction and the outbreak of the new coronavirus. The deficit of HKD37.8 billion for FY2019-20, down from a surplus of HKD58.7 billion for FY2018-19, is mainly a result of the introduction of counter-cyclical support measures and reduced tax and land revenue due to a weakening economy.
In recent months, Chan has already introduced four rounds of enhanced relief measures in addition to those proposed in the 2019-20 Budget.
In this Budget, Chan announced a wider range of measures with the objective of "supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden" during this challenging time. In particular, the Budget is aimed at maintaining Hong Kong’s financial stability and the soundness of public finances, to facilitate the sustainable development of Hong Kong’s society and economy. Nevertheless, it does not introduce many tax measures.
Deloitte: consolidate HK's position as an international financial center with more attractive tax incentives
5 March 2020, HKET
Roy Phan, Tax Director; Nathan Wan, Tax Manager
Due to the absence of explicit instructions on the definition and treatment of carried interest (classification as investment income or service fee/service income), the tax exemption proposed in the latest HK budget will make the treatment of carried interest much clearer. This is good news for the private equity sector. The authors welcome the government's response to concerns about uncertainties in the tax treatment of carried interest. They suggest the government learn from international practices and consider suggestions from professionals during the consultation process, to develop competitive, feasible tax incentives.