In brief

Financial Secretary Paul Chan Mo-po presented the Hong Kong Budget 2023/24 on 22 February with the theme ‘Leaping forward steadily, together we bolster prosperity under our new vision’. The Budget outlines the Government’s latest tax and fiscal policy directions, support measures and resource allocation to pursue economic growth, move to high-quality development and relieve the community’s burden.

Increasing tax certainty

Hong Kong, as an appealing world-class business city, has been practicing a simple and low tax regime. To increase the attractiveness of Hong Kong as an international investment and business hub, the Government will propose an enhancement initiative to provide clearer guidance as to whether the Gains are subject to tax. The initiative will not only facilitate businesses in expansion and restructuring through disposal of equity interests, but also provide more tax transparency, lower the compliance cost of businesses, and increase the competitiveness of Hong Kong’s tax system.

Strengthening Hong Kong as an international asset and wealth management center

The asset management industry continues to be a key industry for Hong Kong. It is encouraging to see that the Government will review the existing tax concession measures applicable to funds and carried interest. It is believed that this should further enhance our competitiveness as an international asset and wealth management hub.

Talent and labor force

The Government has proposed an array of initiatives to enrich the local talent pool and attract overseas talent for various industries, including the newly proposed Capital Investment Entrant Scheme. We believe that these initiatives can enable Hong Kong to meet the overall talent demand as the economy picks up its momentum.

Increasing revenue

Given that the external economic conditions are still volatile and the Hong Kong economy will take time to recover emerging from the pandemic, it seems to be appropriate for the Government not to amend the profits tax and salaries tax rates nor to impose any new taxes. The proposed imposition of an annual special football betting duty of HK$2.4 billion on the Hong Kong Jockey Club under the Betting Duty Ordinance for five years and the introduction of domestic minimum top‑up tax under BEPS 2.0 Pillar Two should provide the Government with new revenue streams in both the short term and long term to achieve fiscal balance.

Encouraging infrastructure investment by the telecommunications industry

Given the importance of advanced and more comprehensive telecommunications infrastructure in our economic development, we are very pleased to see that the Government has listened to the industry’s submission and proposed in the budget to allow tax deduction for the spectrum utilization fees to be paid by the future successful bidders of radio spectrum.

Supporting people and households

The proposed increase in the basic child allowance and the additional child allowance for each child born during the year of assessment from the current HK$120,000 to HK$130,000 starting from the year of assessment 2023-24 is highly appreciated.

The Government has taken up necessary actions to focus on unleashing potential labour supply in an ageing population to replenish workforce. It would be a good start to propose an increase of the tax deduction for the Mandatory Provident Fund (MPF) voluntary contributions made by employers for their employees aged 65 or above, from the current 100% to 200% in respect of such expenditure. It will benefit both the employers by receiving an enhanced tax deduction and the employees by increasing their retirement savings.

End note

Under the backdrop of continued uncertainties in the global economic outlook and that Hong Kong is gradually emerging from the pandemic, we welcome the Financial Secretary’s balanced approach in directing its resources to relieve people’s hardship, stabilize the economy and maintain public confidence as announced.