The Hong Kong Budget was delivered on 28 February 2024, with the theme of "Advance with Confidence. Seize Opportunities. Strive for High quality Development." The Budget covers various aspects of Hong Kong's economy and outlines the Government's plans and strategies for economic recovery and development.
Read Tricor's '2024/25 Hong Kong SAR Budget Commentary' outlining key updates from the Budget and their impact.
The Financial Secretary has proposed several constructive “new measures” in his 2024-25 Budget so as to provide an economic and business environment for the maintenance of the status of Hong Kong as an international financial Centre. Some of the new measures includes:
- Scrapping all cooling measures in the property market - that is no SSD, DSD or NRSD needs to be paid for any residential property transactions starting 28 February 2024.
- Deduction of Expenses and Allowances under Profits Tax - profits tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition. The removal of time limit for claiming the allowances for industrial buildings and structures as well as commercial buildings and structures, allowances.
- Asset and Wealth Management Centre - further enhance the preferential tax regimes for related funds, single family offices and carried interest, including reviewing the scope of the tax concession regimes, increasing the types of qualifying transactions and enhancing flexibility in handling incidental transactions, all to attract more funds and family offices with potential to establish a presence in Hong Kong.
- Patent box tax incentive - introduce in the first half of 2024 a proposal to amend the Inland Revenue Ordinance with a view to implementing the “patent box” tax incentive, which will reduce substantially the tax rate for profits derived from qualifying Intellectual Property to 5 per cent.
- Develop High Value-Added Maritime Service – commence further studies this year for the tax concession measures for the maritime industry in the areas of ship leasing, marine insurance, ship agency, ship management, shipbroking and so forth.
- Re-domiciliation Mechanisms - to submit a legislative proposal in the first half of 2024 enabling companies domiciled overseas, especially enterprises with a business focus in the Asia-Pacific region, to re-domicile in Hong Kong.
- Developments in International Taxation – to conduct consultation on the implementation of proposals to take forward the implementation of the global minimum tax proposal drawn up by the Organization for Economic Co-operation and Development to address base erosion and profit shifting (BEPS). To apply the global minimum tax rate of 15 per cent on large multinational enterprise groups with an annual consolidated group revenue of at least EUR 750 million and impose the Hong Kong minimum top-up tax starting from 2025.
We welcome all measures which are favourable to the business environment to ensure that Hong Kong safeguards its taxing rights and enhances the HKSAR’s investment attractiveness. With the host of tax incentives / measures being announced, whilst still being aligned with international tax standards and practice, Hong Kong would remain attractive and competitive.
With respect to re-domiciliation which would give rise to exit tax implications in the originating jurisdiction, such as capital gains tax or stamp duty, Singapore grants a tax credit on the unrealized profits in its originating jurisdiction if those profits are also taxed in Singapore. We would encourage Hong Kong to offer a more competitive regime and provide more clarity on the tax implications as to encourage Companies to redomicile to Hong Kong.
However, Hong Kong has “lost out” to jurisdictions such as Singapore by not granting an exemption for private credit assets, provided that certain conditions are met.
We are delighted to share with you the key Budget proposals in the ensuing pages and answer any questions you may have.
Contact Us
For more information, please contact Chee Weng Lee, Global Head of Tax at chee.weng.lee@hk.tricorglobal.com.