Hong Kong SAR Budget 2022/2023


Hong Kong SAR Budget 2022/2023

Media Coverage

3 March 2022,HK Economic Times (Chinese only)

In an article contribution to HK Economic Times, Deloitte China Tax Director Jackie Wong and Tax Manager Harry Kwok say the latest Budget covers both relief measures and efforts to broaden the revenue sources facing emerging challenges. Deloitte looks forward to seeing the implementation of the proposed measures with a view to upholding the city's position as an international finance center. 

1 March 2022,Ming Pao (Chinese only)

Deloitte China Tax Director Alfred Chan contributed an article to Ming Pao, discussing how the latest Budget has allocated more resources for anti-epidemic measures while investing in the future with medium- and long-term measures to promote diversified economic development.  

24 February 2022,RTHKChina Daily Hong KongSouth China Morning Post
(Chinese only) : etnetHong Kong Economic TimesQuamnetYahoo! NewsInfocastBastille PostSing Tao DailyHeadline DailyNow NewsHK 01

In reviewing the 2022-23 Hong Kong Budget released on 23 February, Deloitte believes that although extensions of the Cash Payout Scheme, SME Financing Guarantee Scheme and relaxation of the Mortgage Insurance Program are welcome moves to provide much-needed immediate relief to citizens and enterprises, continued substantial investment in key and emerging sectors including innovation & technology (I&T) is needed to secure Hong Kong’s economy against downside risks. Beyond short-term relief measures, Hong Kong needs to embrace a bold but practical approach that strikes a balance between investing for the future and adhering to its long-held principle of fiscal prudence.

23 February 2022,HK01 (Chinese only)  

Pledging to implement the international tax reform proposals drawn up by the OECD, the government plans to introduce a domestic minimum top‑up tax for large multinational enterprise starting from the year of assessment 2024/25 to ensure that their effective tax rates reach the global minimum effective tax rate of 15% so as to safeguard Hong Kong's taxing rights. Deloitte China Southern Region Tax & Business Advisory Services Deputy Leader Raymond Tang believes that this change is unlikely to impact the city's competitiveness, noting that even though a lower tax rate is favorable to companies, they will in fact be facing the same tax regime elsewhere, with the implementation of BEPS2.0 in major jurisdiction around the world.

Rent protection for SMEs, rates hike for pricey flats

23 February 2022, RTHK

The government is proposing to introduce a progressive rating system for domestic properties starting from 2024/25. Deloitte China Tax Partner Roy Phan welcomes the proposal and says, "It's actually fair for the government to look for additional revenue streams or additional income to cope with the pandemic situation", noting the new system would add extra costs for landlords with multiple properties or more expensive flats.

Budget 2022-2023: Hong Kong is mulling allowing listings by large pre-profit or pre-revenue start-ups, Financial Secretary Paul Chan says
23 February 2022, SCMP

In light of the new trend of developing low carbon and sustainable economy, this year's budget has proposed plans to launch a three-year Pilot Green and Sustainable Finance Capacity Building Support Scheme. Deloitte China Tax Partner Polly Wan believes this would be a good move to incentivize commercial sectors to invest in (Environmental, Social & Governance) ESG and move toward Hong Kong's goal of achieving zero-carbon emissions by 2050. 

Three proposed measures to help establish the Greater Bay Area (GBA) as an international innovation and technology hub.
16 February 2022, Ming Pao (Chinese only)

In an article contribution to Ming Pao, Deloitte China tax partner Sarah Chan and tax manager Sandy Lin put forward three proposed measures to help establish the Greater Bay Area (GBA) as an international innovation and technology hub. These include expanding the list of designated R&D institutes to cover those organizations in the GBA; extending the scope of qualified R&D expenditure to cover subcontracted activities in the GBA; and enhancing deductions of education expenses for HKSAR residents, especially those who aspiring to build their careers in the GBA. 

Read more (Chinese only).

Deloitte: Hong Kong set for 2022 budget surplus
15 February 2022, China Daily Hong Kong EditionThe Standard
Chinese only: Wen Wei PoHong Kong Economic JournalNow NewsSing Tao DailyBastille PostHeadline DailyInfocastQuamnetAASTOCKS.cometnetHong Kong Economic TimesCommercial Radio Hong KongLine TodayHong Kong Commercial DailyMetroradioDot Dot NewsHK01Hong Kong Business TimesEconomic DigestYahoo! News、 TVB.comTVB News

Deloitte hosted a press briefing on the 2022/23 HKSAR Budget on 15 February, prior to the Budget Speech by the Financial Secretary Paul Chan on 23 February. Apart from reviewing the latest fiscal conditions and the Budget estimates of the HKSAR Government, Deloitte China's Hong Kong Budget Team also revealed the firm's proposals on how the city can address emerging challenges and promote economic diversification for sustainable development in the future. 

Strengthen Hong Kong's status as an international financial center
11 February 2022, Ming Pao (Chinese only)

In an article contribution to Ming Pao, Deloitte China tax partner Roy Phan and tax manager Irene Wu highlight the importance for the government to stay abreast of the latest developments in international tax reform in order to strengthen Hong Kong's status as an international financial center. To attract more family offices to set-up in the city, they suggest the government to map out the details of tax incentives for family offices. 

Read more (Chinese only).

Tax incentives to facilitate the development of Greater Bay Area in Hong Kong
28 January 2022, Ming Pao (Chinese only)

To promote youth entrepreneurship and innovation and attract Hong Kong companies and talent to the GBA, Deloitte proposes streamlining procedures for offsetting differences in individual income tax across the region; expanding the scope of tax incentives beyond high-end talent and those in short supply; and harmonizing application procedures among GBA cities. In addition, Deloitte suggests Hong Kong's Inland Revenue Department expand the scope of eligible tax deductions to include expenses of self-education to encourage qualified Hong Kong professionals within the CEPA framework to obtain qualifications and develop their careers in the mainland. Specifically, tuition or exam fees charged by approved mainland education providers should be covered. 

Read more (Chinese only).

Review of Tax Policy to promote IP businesses in Hong Kong
3 December 2021, HKEJ (Chinese only)

To further promote Hong Kong's position as an IP hub, Deloitte recommends a comprehensive review of Hong Kong's tax system to ensure this regime is supporting IP commercialization and abides by international tax rules; and an increase in the limit on tax deductions for Type B expenditure under R&D expenses and easing the requirement for deductible R&D costs given the high expenditure associated with most R&D projects. Other suggestions include streamlining application procedures for tax deductions for R&D, broadening the scope of tax deductible IP purchases, and offering tax reliefs on income from certain royalties. While devising these and other incentives, it is also important to consider challenges posed by the evolving international tax landscape, including the global minimum tax rate introduced by the OECD and the EU's review of Hong Kong's territorial source principle of taxation.

Deloitte expects Hong Kong government's deficit to hit 400 million this fiscal year, much lower than government estimates
11 November 2021,(Chinese only) HKEJNow NewsAASTOCKS.comMetro RadioInfocastQuamnetHK01

Deloitte China's Hong Kong Budget Team put forward a wide range of proposals for the coming HKSAR Budget in a press release issued on 11 November 2021. Deloitte projected the HKSAR budget would near breakeven for FY2021/22 with a HKD0.4 billion deficit, and identified the Greater Bay Area, sustainable development, and tax reliefs as priorities to boost economic resilience.

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