More SME support announced in Budget speech

All enhancements will take effect for the 2024-2025 assessment year.

Financial Secretary Paul Chan has announced a series of strategic measures in the 2024-25 Budget speech to revitalize Hong Kong's economy and provide substantial support to small and medium enterprises (SMEs).

Key initiatives include the immediate cancellation of demand-side property measures, injecting funds for stock market liquidity, and comprehensive support for SMEs.

Last October, the Hong Kong Government made changes to demand-side measures for residential properties, including shortening the Special Stamp Duty (SSD) period, reducing Buyer’s Stamp Duty (BSD) and New Residential Stamp Duty (NRSD) rates, and introducing a stamp duty suspension for talents acquiring residential properties.

“After prudent consideration of the overall current situation, we decided to cancel all demand-side management measures for residential properties with immediate effect, that is, no SSD, BSD or NRSD needs to be paid for any residential property transactions starting from today,” Chan said.

“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” he said.

Chan also acknowledged the adaptability to the current economic conditions, highlighting the Hong Kong Monetary Authority (HKMA) adjusting countercyclical macroprudential measures for property mortgage loans in July of the previous year. Further adjustments from the HKMA will be announced.

Moreover, significant progress has been made in the stock market through collaborative efforts with regulators and Hong Kong Exchanges and Clearing (HKEX). Proposed reforms include the introduction of a treasury share buy-back regime and improved trading operations, particularly under severe weather conditions.

The budget also features an extension of the SME Financing Guarantee Scheme application period and a $10b increase in the total guaranteed commitment. 

“To assist SMEs in tackling their capital-flow problems, I will extend the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme for two years to the end of March 2026,” the financial secretary said.

SMEs in the food and beverage and retail industries will also benefit from the Digital Transformation Support Pilot Programme, focusing on digital payment, online promotion, and customer-management solutions. 

Additionally, the Dedicated Fund on Branding, Upgrading, and Domestic Sales (BUD Fund) will receive an additional $500m injection, supporting SMEs in Mainland and overseas markets, including the launch of "E-commerce Easy."

Concerning tax deductions and allowances enhancement, profits-tax payers will now receive tax deductions for expenses incurred in reinstating leased premises to their original condition. Allowances for industrial and commercial buildings and structures will no longer have time limits for claiming, enabling new owners to claim allowances after a change of ownership.

All enhancements will take effect for the 2024-2025 assessment year.