Financial Secretary delivers Budget

The Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) Government, Mr Paul Chan, unveiled the 2023-24 Budget today (22 February 2023).

This is the first Budget of the current-term HKSAR Government and also the first being presented since Hong Kong's emergence from the epidemic. While the current external environment remains severe and ever-changing, the financial system in Hong Kong, as well as the financial position of the HKSAR Government, have displayed remarkable resilience and remained healthy. The Budget initiatives focus on (i) speeding up Hong Kong's post-pandemic economic recovery; (ii) relieving the hardship of people and businesses; and (iii) fully and speedily pressing ahead with high-quality economic development.

Details

The Hong Kong economy contracted by 3.5% in 2022 after a visible growth of 6.4% in 2021, mainly due to the deterioration of the external environment and the outbreak of the fifth wave of the epidemic early last year. As economic activities quickly revive from the epidemic and the various economic stabilisation measures implemented over the past year gradually yield results, the growth of Mainland China economy is expected to accelerate visibly. With the revival of economic activities and the return of Hong Kong's exchanges with Mainland China and the world to normality, the Hong Kong economy will see a visible rebound this year with growth of 3.5% to 5.55% for the year as a whole.

For financial year 2022/23 (ending 31 March 2023), a deficit of HK$139.8 billion (EUR 16.8 billion) is forecasted. Fiscal reserves are expected to be HK$817.3 billion (EUR 98.0 billion) by end March 2023, equivalent to 12 months of government expenditure. For 2023/24, a deficit of HK$54.4 billion (EUR 6.5 billion) is forecasted, and fiscal balance is expected from 2024/25.

Key initiatives in the Budget are set out below -

Reviving the economy

• Allocate HK$300 million (EUR 36.0 million) for attracting mega and MICE events to be staged in Hong Kong;
• The Hong Kong Tourism Board to spend over HK$250 million (EUR 30.0 million) for organising and promoting major tourism events;
• Distribute "Hong Kong Goodies" to one million inbound visitors, offering them shopping and dining privileges;
• Allocate HK$50 million (EUR 6.0 million) for stepping up promotion and branding of Hong Kong;
• Launch the 'Happy Hong Kong'; Campaign for the general public focusing on gourmet experiences, fun amusements and exciting ambience;
• Issue HK$5,000 (EUR 600) electronic consumption vouchers to each eligible Hong Kong permanent resident and new arrival aged 18 or above in two instalments; HK$2,500 (EUR 300) vouchers for eligible persons who have come to live in Hong Kong through different admission schemes or to study in Hong Kong.

Relieving the hardship of people and business

Supporting the general public

• Reduce salaries tax for the 2022/23 assessment year by 100%, subject to a HK$6,000 (EUR 719) ceiling;
• Increase the basic child allowance and the additional child allowance for each child born during the year of assessment from HK$120,000 (EUR 14,389) to HK$130,000 (EUR 15,588) from the 2023/24 assessment year;
• Provide a subsidy of HK$1,000 (EUR 120) for each eligible residential electricity account.

Supporting enterprises

• Reduce profits tax for the assessment year 2022/23 by 100%, subject to a $6,000 (EUR 719) ceiling
• Provide rates concession for non-domestic properties for the first two quarters of 2023/24, subject to a ceiling of HK$1,000 (EUR 120) per quarter;
• Offer fully guaranteed loans for eligible passenger transport operators and licensed travel agents;
• Additional funding of HK$550 million (EUR 65.9 million) to the Hong Kong Trade Development Council to assist enterprises in opening up markets .

Development of Industries

• Digital economy - conduct a feasibility study on the development of an AI Supercomputing Centre
• Web3 - Allocate HK$50 million (EUR 6.0 million) to expedite the third generation Internet (Web3) ecosystem development;
• Set up a task force to advise on the sustainable development of the virtual asset industry
• International GreenTech and GreenFi Centre - Set up a Green Technology and Finance Development Committee to formulate an action agenda covering green technology, green finance, green standard certification, etc; Organise an International GreenTech Week
• Attracting Enterprises and talents - Introduce a mechanism to provide facilitation for companies domiciled overseas for re-domiciliation to Hong Kong;
• Introduce a new Capital Investment Entrant Scheme

Innovation and technology (I&T)

• Allocate HK$6 billion (EUR 719.4 million) for universities and research institutes to set up thematic research centres related to life and health technology;
• Allocate HK$3 billion (EUR 359.8 million) to enhance basic research in technology fields such as AI and quantum technology;
• To support the establishment of a Microelectronics Research and Development Institute to strengthen collaboration with universities, R&D centres and the industry;
• Earmark over HK$260 million (EUR 31.2 million) for Cyberport to launch an incubation programme for smart living start-ups
• The Hong Kong Science and Technology Park Corporation to inject HK$400 million (EUR 48.0 million) into its Corporate Venture Fund and inject an additional HK$110 million (EUR 13.2 million) to launch the Co-acceleration Programme to support the growth of technology start-ups with potential
• Introduce a 'patent box'; tax incentive to encourage the I&T sector to create more patented inventions

Financial Services

• Allocate HK$100 million (EUR 12.0 million) to attract more family offices to Hong Kong;
• Introduce a listing regime for advanced technology companies in Q1 of 2023
• Plan to issue no less than $50 billion (EUR 6.0 billion) of Silver Bond and $15 billion (EUR 1.8 billion) of retail green bonds in 2023-24 Continue to explore with Mainland China various proposals on expansion of mutual market access and enhancement arrangements

Aviation and maritime

• Enhance the aircraft leasing preferential tax regime
• Earmark HK$20 million (EUR 2.4 million) to expedite strategic studies and exchanges of the high-end maritime service industry

Arts and culture

• Inject an additional HK$500 million (EUR 60.0 million) into the CreateSmart Initiative to support the development of creative industries.

The full text of the 2023-24 Budget is available here

The Financial Secretary, Mr Paul Chan, delivering the Budget speech to the Legislative Council.