Summary on The Hong Kong SAR Budget 2021–22

On 24 February 2021, the Financial Secretary delivered his Budget for the financial year 2021/22. The Budget continued to offer short-term relief measures including tax reductions, property rates and business registration fee waivers to support enterprises, stimulate the economy and safeguard jobs. Additional funding and incentives are also proposed to support Hong Kong’s pillar and other sectors. Below is a summary on the key tax-related measures/ policies that have been suggested in the Budget.

Key one-off tax-related measures for 2021/22

One-off relief measures for individuals

The Financial Secretary proposed a 100% reduction of salaries tax and tax under personal assessment for the year of assessment 2020-21, subject to a ceiling of HKD10,000 (as compared to a ceiling of HKD20,000 last year) per case:

• For individual taxpayer, the ceiling is applied individually.
• For married couples jointly assessed, the ceiling is applied to each married couple (i.e. capped at HKD10,000 in total).
• For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse – the ceiling is applied in the same way as salaries tax.

Tax relief for businesses

The Financial Secretary proposed a 100% reduction of profits tax for 2020-21, subject to a ceiling of HKD10,000 (as compared to a ceiling of HKD20,000 last year). Business registration fees are also waived.

Other key tax-related changes for 2021/22

Stamp duty on stock transfers

The rate of stamp duty on stock transfers is proposed to be raised from 0.1% to 0.13%, payable by buyers and sellers respectively. Subject to the completion of the legislative process, the measure will take effect from the date specified in the amendment ordinance.

Tax chargable for first registration of private cars

The rate of each tax band for the first registration tax for private cars (including electric private cars) is proposed to increase by 15% and the vehicle licence fee by 30%.

Family office business

The Government will seek to offer one-stop support services to family offices interested in establishing a presence in Hong Kong, and will review related tax arrangements.

International tax co-operation

The OECD is drawing up new proposals to address BEPS 2.0, which is expected to include the introduction of a global minimum tax rate and a digital tax. The Advisory Panel on BEPS 2.0 will consider these proposals and their impact on Hong Kong. The current focus will be to:

1. actively implement the OECD’s BEPS 2.0 proposals according to international consensus;
2. minimise the impact on local SMEs where possible and strive to maintain the simplicity, certainty and fairness of Hong Kong’s tax regime;
3. minimise the compliance burden on affected corporations while safeguarding Hong Kong’s taxing rights; and
4. keep up the efforts in improving Hong Kong’s business environment and enhancing the competitiveness, with a view to attracting multinational corporations to invest and operate in Hong Kong.