Government cuts taxes, waives fees to rescue embattled enterprises

It will cost the government $18.3b in total.

The Hong Kong government has introduced a new round of measures to support struggling sectors amidst the impact of the COVID-19 outbreak, which in total will cost the government around $18.3b.

For FY2020-21, the government is reducing the profit tax by 100%, subject to a ceiling of $20,000, finance secretary Paul Chan revealed in his budget speech. This is expected to benefit 141,000 taxpayers and will reduce government revenue by $2b.

The government is also waiving rates for non-domestic properties for all four quarters of the current fiscal year, which is estimated to benefit 420,000 non-domestic properties and will reduce government revenue by $3.2b. It will have a ceiling of $5,000 per quarter in Q1 to Q2 and a ceiling of $1,500 per quarter in the remaining two quarters for each rateable non-domestic property.

Business registration fees and registration fees for all annual returns have also been waived for the whole year, and will cost Hong Kong $3b and $212m, respectively.

A concessionary low-interest loan under the SME Financing Guarantee Scheme was also introduced, under which 100% guarantee will be provided by the government. Small and medium enterprises (SMEs) will be granted a loan based on their salary and rental expenditures for six months, subject to a ceiling of $2m.

Further, the loan repayment period is up to three years and, on an opt-in basis, a principal moratorium is available for the first six months during which only interest payments have to be made. The government has allotted a $20b guaranteed for the loan scheme.

The government will continue to implement its earlier measures, which include a 75% subsidy for monthly electric bills for each eligible non-domestic household (subject to a $5,000 cap); and a 75% subsidy for water and sewerage fees, subject to a monthly cap of $20,000 and $12,500 respectively per household.

They have also allocated a $100m budget for the rents of local recycling enterprises, according to Chan.

For the next six months, the government will also be extending the 50% rental reduction for for eligible tenants of government properties, government land and EcoPark; the 50% fees and rental reduction for eligible operators of properties covered by short-term waivers; a 50% reduction of hire charges for providing hirers of civic centres under the Leisure and Cultural Services Department; and fees and rent reduction for cruise lines and existing tenants of the Cruise Terminal.