Hong Kong has announced an economy boosting budget as the jurisdiction battles a new wave of Covid-19.
The measures will serve as a shot in the arm as growth is predicted to slow to 2-3.5% this year from 6.4% in 2021.
For 2021/22 there is an estimated surplus of $18.9 billion with fiscal reserves expected to be $946.7 billion by the end of March 2022. Hong Kong usually runs balanced budgets or surpluses but it still has ample reserves - estimated at HK$940 billion at the end of the government's current term in June and expected to grow above HK$1 trillion in the coming five years.
Budget highlights include:
• $22 billion for strengthening testing work and providing additional support for the Hospital Authority to deal with the pandemic
• Issue $10,000 electronic consumption vouchers to every Hong Kong permanent resident and new arrivals aged 18 or above
• A 100% reduction in salaries tax, capped at HK$10,000
• Tax deductions for residents related to rent payments and subsidies for transport and utilities
• Application period for the 100% loan guarantee for enterprises extended to end June 2023
• Reduce profits tax for the year of 2021/22 by 100% subject to a ceiling of $10,000 - expected to benefit 151,000 firms
• Business registration fees for 2022/23 waived
• Extend the pre-approved Principal Payment Holiday Scheme to end October, offering enterprises the option of making partial repayment of principal over a longer period of time
• Propose to provide tax concessions for the eligible family investment management entities managed by single-family offices
• Allocate $135 million to the Hong Kong Trade Development Council for the introduction of support scheme for pursuing development on the mainland.