Under the theme “Advance with confidence,” Hong Kong’s Financial Secretary, Paul Chan, unveiled the Hong Kong Budget 2024–25 on February 28. This budget comes amid persisting pandemic effects and global economic concerns. Take advantage of the chance. Aspire for superior development.The budget proposes initiatives to encourage small and medium-sized businesses (SMEs), promote sector-specific growth, and accelerate economic recovery. In the medium to long term, these steps will be essential for preserving Hong Kong’s competitiveness and guaranteeing the city’s sustained growth.
In this article, we will provide a simplified summary to help you understand how these measures will impact businesses:
Bolstering Confidence
Strategic Partnerships: Enhancing the Small Business Landscape
The announcement by the Finance Chief of over ten strategic enterprises partnering with The Office for Attracting Strategic Enterprises (OASES) signifies a major advancement in enriching Hong Kong’s business ecosystem. Anticipated to introduce over $40 billion in investments and generate around 13,000 jobs (including 30 companies from the initial batch), this initiative nurtures a dynamic and supportive environment for businesses. It offers SMEs opportunities for new collaborations, broader network access, and the chance to tap into the innovation and market prospects brought by these strategic enterprises to Hong Kong.
Attracting Global Talent and Business Re-domiciliation
The proactive measures of the government have welcomed over 140,000 applicants through talent admission schemes to Hong Kong, with more than 100,000 already establishing their new residence in the city. This significant influx of skilled professionals is crucial for companies in search of expertise and significantly contributes to the vitality of the local economy.
Enhancing Liquidity and Financial Assistance for SMEs
Recognizing the essential role of SMEs, which account for more than 98% of all local businesses, the Hong Kong budget prolongs the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme by an additional two years until March 2026. This move, coupled with a $10 billion increase to the existing $280 billion fund, is intended to facilitate easier access to government-backed loans at preferential rates.
Accelerating Digital Transformation and Online Expansion
The budget emphasizes the importance of digital transformation for SMEs via the Digital Transformation Support Pilot Programme, specifically designed to help SMEs in the retail and food service sectors integrate digital technologies, with the expectation of aiding over 8,000 businesses. Moreover, the “E-Commerce Easy” program, part of the BUD Fund, seeks to enable firms to enter the Chinese e-commerce market, offering up to HK$1 million in support for each qualifying company.
Revitalizing Tourism and Sector-Wide Benefits
The government intends to host more than 80 significant events in the first half of 2024 with a pledge of $100 million for event marketing over the following three years in an attempt to revitalize the economy and various sectors. These programs, which go hand in hand with the Tourism Board’s development of themed tours and seasonal festivals, are meant to boost demand in the retail, hospitality, catering, and transportation industries, as well as revitalize tourism.
Tax Reductions, Incentives, and Business Support
The Hong Kong budget introduces several tax reductions, incentives, and support for businesses for the fiscal years 2023/24 and 2024/25.
For the fiscal year 2023/24, it offers a total, 100% exemption on both salary tax and personal assessment tax, limited to $3,000, which will be reflected in the final tax bill for the 2023/24 assessment year, benefiting approximately 2.06 million taxpayers.
Additionally, it suggests a one-time, $3,000 maximum 100% profit tax refund for 2023–2024. This is anticipated to help about 160,000 enterprises. In addition, the budget includes provisions for industrial buildings and structures that are practically claimable by new owners upon ownership changes, as well as tax credits for costs made to reinstate leased commercial premises.
For the fiscal year 2024/25, it plans a rate concession for non-domestic properties for the first quarter, from April to June 2024, with a cap of $1,000 per rateable property, which is anticipated to assist about 430,000 non-domestic properties.
Accelerating High-quality Development
Investment in Future Growth and Innovation
The Hong Kong government commits HKD 10 billion to the New Industrialization Acceleration Scheme (NIAS) to attract high-value-added manufacturing in areas such as biotechnology, artificial intelligence, and green technology. This initiative complements previous investments, such as the Hong Kong Growth Portfolio’s backing of tech firms and startups, focusing on the Strategic Tech Fund for local startups.
Through access to venture funding, accelerator programs, and incubator programs, the government continues to encourage companies. Government attempts to create a vibrant startup environment are exemplified by the joint efforts of Cyberport, InvestHK, and Hong Kong Science Park to attract foreign startups. Furthermore, legislative improvements and financial support will be given to growth-oriented sectors, including green finance, the digital economy, and innovative manufacturing, which will further improve the business environment.
Responding to Changes in Global Trade Dynamics
Hong Kong is actively refining its trade and economic strategies to better adapt to the changing global trade environment, placing increased emphasis on boosting exports to emerging markets like ASEAN and the Middle East. As Mainland manufacturing enterprises continue to globalize, Hong Kong is positioning itself as a leading hub for multinational supply chain management, providing comprehensive professional services. This strategic shift is reinforced by the expansion of Hong Kong’s economic and trade connections abroad, solidifying its position in the global business landscape. Initiatives aimed at attracting Mainland manufacturing firms to establish their global or regional headquarters in Hong Kong underscore the city’s aspirations to become a central nexus for global business operations.
Conclusion
In conclusion, the 2024-25 Hong Kong budget establishes a solid groundwork for business resurgence and economic renewal. Concentrating on SME empowerment, digital transformation, tax incentives, and investments in sectors with high growth potential, the government is dedicated to fostering a business-friendly climate that propels companies towards success and cements Hong Kong’s position as a frontrunner in innovation and economic progress. The strategic efforts to attract worldwide talent and simplify business re-domiciliation further bolster Hong Kong’s competitive advantage, rendering it an appealing choice for both businesses and professionals.
