2019/20 Budget Summary

The summary of the 2019/20 Budget is excerpted especially for Business sector.

Relieving Burden

On salaries tax, there is various allowances and deduction ceilings, widened and increased the number of tax bands, and adjusted the marginal tax rates. These measures aim to relieve the long-term tax burden of citizens through a structural approach and increase taxpayers’ disposable income.

The series of relief measures, including:

(a)  reducing salaries tax and tax under personal assessment for 2018-19 by 75 per cent, subject to a ceiling of $20,000. The reduction will be reflected in the final tax payable for 2018-19.

(b)  reducing profits tax for 2018-19 by 75 per cent, subject to a ceiling of $20,000. The reduction will be reflected in the final tax payable for 2018-19.

(c)  waiving rates for four quarters of 2019-20, subject to a ceiling of $1,500 per quarter for each rateable property.

Support for Enterprises

The measures to support local enterprises in tiding over uncertainties in the present environment are included:

(a)  waiving the business registration fees for 2019-20

(b)  regularising the Technology Voucher Programme and rolling out enhancement measures, including doubling the funding ceiling for each enterprise from $200,000 to $400,000 to encourage the wider adoption of technology by local enterprises to improve their efficiency and services;

(c)  injecting another $1 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) this year, following the injection of $1.5 billion last year;

(d)  following the extension of the geographical scope of the BUD Fund from the Mainland to ASEAN countries in August 2018, to further extend the scope to include all economies which have entered into an FTA with Hong Kong, thereby enabling enterprises to take advantage of the FTAs to explore new markets and new business opportunities;

(e)  following an increase in the funding ceiling per enterprise under the BUD Fund from $0.5 million to $2 million last year, to further increase the ceiling to $3 million this year, including $1 million for the Mainland market and $2 million for other FTA markets; and

(f)  to help SMEs facing liquidity problems, enhancements are implemented to the special concessionary measures under the SME Financing Guarantee Scheme operated by the HKMC Insurance Limited last November, including reducing the guarantee fee rates by 50 per cent, increasing the maximum loan amount to $15 million, and lengthening the maximum loan guarantee period to seven years. There is extension for the application period of the special concessionary measures and further extend the application period of the special concessionary measures under the scheme and the three enhancement measures mentioned above to 30 June 2020.

Developing the Economy

In addition to financial services and I&T, the Government will strive to develop other economic sectors, with a view to assisting enterprises in exploring new business opportunities, driving sustainable economic development and providing broader pathways for the next generation to realise their potential.

International Transportation Centre

There are several measures to develop the air cargo industry and maritime industry.

Hong Kong enjoys the unique advantages of a strategic geographical location, world-class infrastructure, and various inter-modal transportation services. Moreover, the Development Plan has also affirmed the status of the Hong Kong International Airport (HKIA) as an international aviation hub among the airports in the Greater Bay Area.
The HKIA is the world’s busiest cargo airport and its passenger throughput is also among the highest in the world. The adjacent Lantau Island has become a “double gateway” connecting the world and Greater Bay Area cities upon the commissioning of the Hong Kong-Zhuhai-Macao Bridge (HZMB). The Government has invited the Airport Authority Hong Kong to submit a proposal for the topside development at the HZMB Hong Kong Boundary Crossing Facilities Island. It is hoped that the topside development, together with the three-runway system and other development projects and facilities at the Airport Island, will produce synergy and render Lantau an Aerotropolis connecting the Greater Bay Area and the world.

In addition, the Government has offered profits tax concessions to aircraft leasing and related businesses. The measure has been well received by the market since its introduction. A number of large-scale aircraft leasing companies have negotiated or reached deals with airlines around the world through Hong Kong.

On maritime transport, despite declining container throughput in recent years, Hong Kong has considerable advantages in maritime tradition, geographical location as well as shipping registration, financial and legal services. Hong Kong has a vibrant maritime services cluster, with over 800 maritime companies providing ship agency and management, ship brokering, marine insurance as well as maritime law and arbitration services. Hong Kong is also a ship finance centre in the region. Shipping loans and advances in Hong Kong have more than doubled in the past 10 years.

Ship leasing is an emerging business model of ship finance. The Government has commissioned the Hong Kong Maritime and Port Board to set up a dedicated task force to study tax and other measures, with a view to attracting ship finance companies to establish their presence in Hong Kong and developing Hong Kong as a ship leasing centre in the Asia-Pacific region. The study is expected to be completed in the second half of this year. Moreover, to promote the development of marine insurance so that shipowners and shipping companies can enjoy better support, the Government will offer a 50 per cent profits tax concession to eligible insurance businesses including the marine insurance industry.

Tourism

With the efforts of the Government, the Hong Kong Tourism Board (HKTB) and the travel trade, the tourism industry regained growth after several years of consolidation. The parties will strive to bring the edges of local tourism resources into full play and promote diverse culture with Hong Kong characteristics, with a view to drawing more high-spending overnight visitors from different source markets and promoting the healthy development of the tourism industry having regard to the receiving capacity of Hong Kong.

The Government will continue to join forces with the HKTB and the trade to implement the Development Blueprint for Hong Kong’s Tourism Industry released in 2017. An additional sum of around $353 million will be allocated to enable the HKTB to step up promotion of Hong Kong’s image as a premier tourism destination, entice visitors to experience Hong Kong’s local culture in different districts, and enhance publicity on Hong Kong’s major festivals and events, etc. Various new initiatives will be rolled out, including:

(a) enchancing the capability of the Ngong Ping Nature Centre in providing hiking information for visitors, improving the facilities of country trails in the vicinity, and commissioning a consultancy study for enhancing the facilities of the Hong Kong Wetland Park;

(b) allocating additional funding to the Travel Industry Council of Hong Kong to encourage the development of more thematic tourism products, organise business forums or business co-operation and exchange activities outside Hong Kong, and provide training subsidies for practitioners to enhance service quality of the trade; and

(c) commissioning a consultancy study on strategies and initiatives to promote smart tourism in Hong Kong and enhance visitors’ travelling experience through the application of technology. The official landing page will extend progressively to all boundary control points. The Tourism Commission will continue to work with the OGCIO to provide free Wi-Fi service at tourist hotspots.
Creative Industries

Hong Kong’s creative industries, blessed with a wealth of talent, are emerging industries worthy of vigorous development. Following the injection of $1 billion into the CreateSmart Initiative, the Government will inject another $1 billion into the Film Development Fund in 2019-20 to help the local film industry thrive further. This will bring the new resources to the creative industries to a total of $2 billion within two years, a manifestation of the Government’s determination to developing the creative industries in Hong Kong. The optimal use of the funding can enhance talent grooming and support for novices, promote start-ups, tap new markets for the industries, and build local branding for relevant sectors to facilitate long-term development of the film industry.

With the injection of new funds, sixth First Feature Film will be upscaled Initiative by doubling the number of winning teams to six and increasing funding by about 50 per cent, thereby giving new impetus to the Hong Kong film market. The production budget limit of the Film Production Financing Scheme will also raise to $60 million and the maximum subsidy for each film to $9 million to support local mid-budget film productions.

By collaborating with the Urban Renewal Authority (URA) and the Hong Kong Design Centre to press ahead with the Sham Shui Po Design and Fashion Project, a five-storey commercial space within a redevelopment project in the district has been reserved for the construction of a landmark for nurturing young designers and supporting start-ups in fashion design. Construction works will commence this year for anticipated completion in 2023-24.

Construction Industry

In the next few years, the annual capital works expenditure is expected to rise to over $100 billion, and the annual total construction output will increase to over $300 billion, covering the construction of public and private housing, implementation of hospital development and redevelopment projects, development and expansion of new towns and new development areas, as well as construction of a third runway for the airport.

Recently, some projects have aroused public concern about the quality of works and tarnished the reputation of the construction industry gained over the years. The industry must endeavour to enhance the public’s confidence in them.

In order to enhance the standard and efficiency of works supervision, digitisation will be promoted of the supervision system. Pilot projects will be launched to motivate site supervisors and contractors to use innovative technology to collect real-time data on site environment and works progress for record, monitoring and analysis purposes. The Development Bureau (DEVB) will set up a task force to plan and co-ordinate inter-departmental work in this regard.

The Project Cost Management Office will also be upgraded and rename it as the Project Strategy and Governance Office for implementing strategic initiatives and enhancing capabilities in cost surveillance and project governance. Adopt a holistic approach can strengthen cost management and uplift the performance of public works projects. Moreover, the DEVB is gearing up for the establishment of a Centre of Excellence for Major Project Leaders to equip public officers with more innovative minds and enhanced leadership skills for delivering public works projects. $40 million have been earmarked for the first three years of operation of the centre, and plan to offer courses starting from mid-2019.

In view of the challenges of labour shortage and an ageing workforce in the construction industry, and the keen demand for skilled workers arising from infrastructure development projects in the short to medium term, $200 million will be allocated to expand the apprenticeship scheme for the construction industry to cover more trades with manpower shortage, and increase the allowances for new trainees pursuing one-year full time programmes to encourage and attract in-service workers to pursue continuing education.

Besides, the Government will lead the construction industry to implement Construction 2.0 for improving productivity, quality, safety and environmental performance of the industry by advocating innovation, professionalisation and revitalisation.

 

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