2023 was a mixed bag in terms of economic growth, and Hong Kong is keenly awaiting the policies that Financial Secretary Paul Chan will announce in his upcoming Budget Address.
Factoring in the weak external environment and slower-than-expected post-pandemic recovery, Chan has indicated that the Budget will actively chase development to promote stability, while resources will be allocated to drive economic growth and bring benefits to Hong Kong residents.
Our Annual Business Prospects Survey conducted in November showed that about 37% of respondents were cautiously optimistic about an uptick in business turnover in 2024. However, when compared to pre-pandemic levels, 42% believed that their business performance had not yet fully rebounded and would continue to lag.
After extensive consultations with our members, the Chamber has submitted proposals for the 2024-25 Budget to the HKSAR Government on reviving the economy. The submission addresses a raft of important issues, including the urgent need to retain and hire talent, and measures to make the tax system more effective.
While the Government must be applauded for investing in innovation and spearheading international outreach initiatives to regions like the Middle East and Southeast Asia, Hong Kong would also be well served by short-term relief measures.
We recommend extending the time-limited special concessionary measures of the SME Financing Guarantee Scheme for another two years, and providing a one-off rebate on profits tax, salaries tax and tax under personal assessment by 100%, subject to a ceiling of HK$6,000.
One of this city’s greatest assets is its competitive tax regime. With the ongoing economic uncertainty, we urge the Government to consider immediate and complete removal of existing property cooling measures like the Special and Double Stamp Duties. These are counterproductive in the current climate and would also go a long way to alleviate the pressure.
Hong Kong is home to more of the world’s top 500 family firms than any other destination in the Asia-Pacific, and plans are underway to transform the city into a family office hub. To that end, we suggest granting a waiver regarding the 5% cap on incidental transactions and expand the scope of qualifying assets for single family offices to enjoy profits tax concession.
Meanwhile, the shortage of manpower continues to adversely affect companies in Hong Kong. While the authorities have launched highly successful schemes to attract international professionals, a targeted approach is needed to repopulate the city’s shrinking talent pool. We recommend granting tax deductions and subsidies for working parents, providing affordable childcare services and helping employers to upskill staff.
Looking ahead, I hope that the Year of the Dragon will bring positive changes and prosperity to Hong Kong and the business community, as we continue in our efforts to stay competitive in a vastly changed world.