Hong Kong 2021-22 Budget proposals
Hong Kong’s Financial Secretary, Paul Chan, outlined his budget for 2020-21 in the Budget Address on 24 February 2021. Acknowledging a record high deficit and another difficult year ahead the budget proposals focus on stabilising the economy and relieving people’s burden.
The Financial Secretary outlined measures to support enterprises, and revive and stimulate the economy, as well as regarding tax policy. Highlights of the measures of particular interest to Hong Kong companies and our clients operating in Hong Kong are set out below.
Waiving business registration fees for 2021-22
It is proposed again that the business registration (BR) fees for the period 1 April 2021 to 31 March 2022 will be waived, and only the BR Levy will be charged.
As such, the total BR fee for a 1-year certificate will be HKD250 (USD32) for this period, instead of HKD2250 (USD287). The IRD will announce the refund arrangement after the relevant legislative amendment is passed by the Legislative Council.
Clients who have already been billed for their BR fee the coming financial year will receive a reduced invoice to account for the fee waiver in their next billing cycle. Whereas our clients who are incorporating in the coming financial year will be charged according to the proposed fee waiver.
Hong Kong companies continue to benefit from the waiver of registration fees for company Annual Returns as announced in last year’s budget (Marbury website).
Tax rates remain unchanged
No changes are proposed to the rates of tax for 2020/21 as per the following:
- Companies (16.5% / first HKD 2 million assessable profits of eligible taxpayers chargeable at half of the tax rate: 8.25%)
- Unincorporated businesses (15% / first HKD 2 million assessable profits of eligible taxpayers chargeable at half of the tax rate: 7.5%)
- Salaries tax (lower of standard tax rate at 15% and progressive tax rates from 2% to 17%)
For profits tax, salaries tax, and tax under personal assessment, there will be a reduction of 100% of the tax for 2019/20, capped at HKD 20,000.
Watch this space:
With regards to tax policy going forward, the Financial Secretary confirmed that Hong Kong will actively implement the BEPS 2.0 proposals, relating to global minimum taxation, whilst seeking to minimise the impact on local SMEs and Hong Kong’s simple tax regime, and its attractiveness to multinational corporations to invest and operate in Hong Kong.
More information can be found at the official website of the budget proposal.
Taxpayers are reminded they should file their profits tax returns and tax returns for individuals for the year of assessment 2020/21, to be issued in coming April and May respectively. If an extension of the filing deadline is required, your tax representative can have your business included in the block extension scheme. Encore assists with the preparation and filing of profits tax returns. For more information and filing extension, please contact us.