By Samuel Fung, Senior Tax Manager, Equiom Hong Kong
The Financial Secretary for Hong Kong, Mr. Paul Chan Mo-po, expressed during his 2020-21 Budget speech on 26 February 2020:
'2019 was an unsettling year fraught with obstacles and an unforgettable one for all Hong Kong people.'
Against the social and economic background of 2019 the Hong Kong Government rolled out an array of one-off relief measures with the objectives of supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden. In addition, the Budget also aimed at enhancing the competitiveness of Hong Kong’s pillar industries in the long run. Summarised below are those measures that are particularly worthy of note.
One-off relief measures
The Government proposed to reduce profits tax, salaries tax and tax under personal assessment for 2019-20 by 100%, subject to a ceiling of HK$20,000. Business registration fees for 2020-21 and fees for filing company annual returns for 2 years will also be waived. In addition, the Government will introduce a concessionary low-interest loan with 100% Government guarantee for enterprises, which will be open for application for 6 months. The maximum amount of loan is HK$2 million with a repayment period of up to 3 years, and a principal moratorium available for the first 6 months.
With a view to attracting more global shipping business operators and commercial principals to set up business in Hong Kong, the Government will amend the relevant legislation to provide tax concessions to qualifying ship lessors and a half-rate profits tax concession to qualifying ship leasing managers. In addition, profits tax will be halved for eligible insurance businesses including marine insurance. The relevant legislative bills have been introduced into the Legislative Council for readings.
Asset and wealth management
To encourage more private equity funds to domicile and operate in Hong Kong, the Government will prepare new legislation on the establishment of a limited partnership regime. This will meet the operational needs of private equity funds and also provide tax concessions for carried interest issued by private equity funds operating in Hong Kong, subject to fulfilment of certain conditions. In this context, carried interest refers to a share of profits paid to the fund manager when the financial performance of the fund exceeds a specified hurdle rate.
In order to strengthen the competitiveness of Hong Kong as an Exchange Traded Fund (ETF) listing platform, the Government proposed to waive the stamp duty on stock transfers paid by the ETF market makers when creating and redeeming ETF units in Hong Kong.
Equiom Hong Kong’s experienced team provides tax advice, obtains advance tax rulings and represents taxpayers in tax investigations. Speak to our team today if you wish to learn more.
Contact Samuel Fung for further information on the topics discussed in this article.
This article been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.