China

Hong Kong Budget Summary 2012 - 2013 

www.kpmg.com/cn/en/hk-budget

 

On 1 February 2012, the Financial Secretary, John Tsang Chun-wah, delivered his fifth Budget Speech to the Legislative Council. KPMG China's Budget Summary outlines the proposed changes and comments on their implications.

Highlights

Economic performance

• Surplus for the year of HK$66.7 billion is well ahead
  of the forecast deficit of HK$8.5 billion (revised
  forecast figure after additional measures were
  announced on 2 March 2011). The 2011 surplus
  was driven by the significant increase in land sales
  and Profits Tax and Salaries Tax collections.

• Key Government concerns for 2012-13 are: (i) preventing
  the risk of an asset-price bubble; (ii) easing the burden of
  inflation; and (iii) preparing Hong Kong for the challenges
  ahead.

• Measures worth nearly HKD 80 billion were proposed for
  education, medical services, social welfare, housing,
  infrastructure and livelihood policy areas and the promotion
  of economic development.

 

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Infrastructure

• The Government announced a series of infrastructure
  developments, with a record HKD 184 billion to be spent on
  capital works devoted to projects such as the Ten Major
  Infrastructure Projects, cross-boundary facilities and
  transport infrastructural projects.

 

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Corporate relief measures

• Profits Tax for 2011-12 to be reduced by 75 percent up to
  a maximum of HKD 12,000.

• Capital duties levied on local companies to be abolished.

• Import and export declaration charges to be halved.

• Waiver of business registration fees for 2012-13.

 

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Individual relief measures

• Salaries Tax (and tax under personal assessment)
  for 2011-12 to be reduced by 75 percent up to
  HKD 12,000 and increases in personal allowances.

• Increase in deductions from HKD 12,000 to HKD 15,000
  for mandatory MPF contributions.

• Electricity subsidy of HKD 1,800 per residential
  electricity account.

• Rates exemption for one year capped at HKD 2,500
  per quarter.

• An extra allowance equivalent to one month's payment for
  CSSA and Old Age Allowance and Disability Allowance
  recipients.

 

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Other measures

• Additional issue of iBonds worth HKD 10 billion with
  a maturity period of three years targeting Hong Kong
  residents.

• Enhancement of the existing SME Financing Guarantee
  Scheme.

• Hong Kong Mortgage Corporation to introduce a
  microfinance pilot scheme.

• Public consultation to be conducted in first quarter of
  this year on the proposed legislation to level the playing
  field for Islamic finance.

 

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