Government Introduces New Tax Arrangements and Extends Funding Schemes in Hong Kong Budget for 2024-2025

The Financial Secretary of Hong Kong announced the SAR’s government budget for the fiscal year 2024-25. It includes increased expenditure in essential areas like healthcare and education, as well as support measures for residents and companies such as rate concessions and tax reductions to boost the economy.

On February 28, 2024, the Financial Secretary of Hong Kong, Paul Chan, announced the Special Administrative Region’s (SAR) government budget for the fiscal year 2024 to 2025 (“2024-25 Budget”). The 2024-25 Budget outlines the government’s planned revenue and expenditure for the upcoming fiscal year and includes details such as projected government revenue from taxes, fees, and other sources, as well as planned expenditures on various sectors like healthcare, education, infrastructure, and social welfare.

Under the 2024-25 Budget, total government expenditure is set to rise by 6.7 percent to HK$776.9 billion (US$99.23 billion) and reach a 24.6 percent ratio to nominal GDP. Recurrent expenditure will increase by 7 percent to HK$580.2 billion (US$74.1 billion), with a focus on essential areas like health, social welfare, and education. Non-recurrent expenditure, meanwhile, is expected to decrease substantially by 47.7 percent to HK$33.6 billion (US$4.29 billion) owing to lower spending requirements in the post-pandemic era.

The 2024-25 Budget introduces a variety of support measures for Hong Kong residents and companies.

The support measures include rate concessions for both domestic and non-domestic properties in the first quarter of the 2024-25 fiscal year. This concession, capped at HK$1,000 (US$127.73) per rateable property, is estimated to benefit approximately 3.08 million domestic properties and 430,000 non-domestic properties, resulting in a reduction of government revenue by HK$2.6 billion (US$332 million) and HK$370 million (US$47.26 million), respectively.

Additionally, there will be a 100 percent reduction in salaries tax and tax under personal assessment for the 2023 to 2024 year of assessment, with a ceiling of HK$3,000 (US$383.18). This reduction will be reflected in the final tax payable for the year, benefiting around 2.06 million taxpayers and reducing government revenue by HK$5.1 billion (US$651.4 million).

Similarly, profits tax for the 2023 to 2024 assessment year will see a 100 percent reduction, also capped at HK$3,000. This measure will benefit approximately 160,000 businesses and reduce government revenue by HK$430 million (US$54.92 million).

This article is republished from China Briefing. Read the rest of the original article.

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