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Hong Kong: Budget 2020 measures against COVID-19

On February 26th, 2020, the Hong Kong government revealed its 2020-21 budget, promising economic aid measures worth HK $ 120 billion to revive and support the city's economy, shaken both by civil unrest and the COVID-19 epidemic.

The government has planned important measures to support the city's economy by promising cash allowances for every adult permanent resident of Hong Kong. This is accompanied by generous tax breaks and business support and initiatives to resolutely fight the epidemic, with an expected impact on the tax deficit of around HK $ 139.1 billion, equivalent to 4.8% of GDP. The government’s official GDP forecast is an expected GDP growth between 0.5% and 1.5% during 2020.

Financial support and industry concessions

The Hong Kong government has introduced a low interest subsidized loan under the SME Loan Guarantee Scheme, under which the government will provide a 100% guarantee to SME’s availing of the scheme. The maximum loan amount for the eligible businesses is based upon salary and rental costs for six months, with a maximum limit of HK $2 million. The Hong Kong government expect to provide HK $20 billion in guarantees under this SME loan scheme.

Taxation on profits for the 2019/20-year assessment shall be reduced by 100%, with a limit of HK $20,000 (which is expected to be availed of by around 140,000 taxpayers). The registration fees for companies for 2020-21 with the company registry shall be voided (1.5 million potential beneficiaries among commercial operators) as well as the registration fees for the business registry for two years.

Rental costs shall be reduced by 50 percent for another six months for state-owned properties with eligible tenants, public land and EcoParks. This is in addition to a waiver of 75 percent of water and sewage costs and a subsidy of 75 percent of electricity utility bills for each eligible non-domestic household account.

Public welfare measures