China
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Hong Kong Budget Summary 2014-15

 

 

On 26 February 2014, the Financial Secretary, John Tsang Chun-wah, delivered his seventh Budget Speech to the Legislative

 

Council. KPMG China's Budget Summary outlines the proposed changes and comments on their implications.

 


Economic Performance

 

Economic Performance

 

  • The Surplus for 2013-14 is about HKD12 billion, again way above the forecast deficit of HKD4.9 billion. The surplus has been driven by increases in Land Premiums and Salaries Tax collections


  • A steady economic improvement is forecast with Gross Domestic Product growth of 3 to 4 percent for 2014. The headline inflation rate for 2013 was 4.3 percent, with the underlying inflation rate at 4.0 percent, down by 0.7 percentage points from 2012


Infrastructure and Housing

 

Infrastructure and Housing

 

  • The 2014-15 Land Sale programme includes 34 residential sites capable of providing 15,500 units. All major sources of land supply are forecast to provide land capable of building 20,000 private residential flats, which is close to the average yearly target

 

  • In addressing Hong Kong's position as an international hub, the Financial Secretary noted the importance of, and need to enhance, transport networks and financial infrastructure. He also cited the need to make Hong Kong a more liveable city through investment in environmental infrastructure to ensure cleaner air, cleaner sea water and better treatment of solid waste.

 

Relief Measures

 

Relief Measures

 

  • Proposed one-off relief measures worth HKD20 billion comprise:-
 
  • Tax under Profits Tax, Salaries Tax and personal assessment for 2013-14 to be reduced by 75 percent capped at HKD 10,000;
  • Increase in the allowances for maintaining a dependent parent or grandparent;
  • Rates exemption for the first two quarters of 2014-15 capped at HKD 1,500 per quarter;
  • Payment of one month’s rent for public housing tenants; and
  • Extra allowances to be given to recipients of Comprehensive Social Security Assistance, Old Age Allowance, Old Age Living Allowance and Disability Allowance

  

 

Public Finances 

 

Public Finances

 

  • The Working Group on Long-Term Fiscal Planning performed a health check on the current state of Hong Kong's public finances. The Working Group recommends that public expenditure be controlled at or around 20 percent of GDP and that the Government preserve, stabilise and broaden the revenue base

 

Financial Services

 

Financial Services

 

  • Legislation is to be introduced as soon as possible to allow private equity funds to enjoy the tax exemption for offshore funds. Consultation will begin in March 2014 on proposals to introduce an open-ended fund company structure

  • Propose to review the requirements under the Inland Revenue Ordinance for interest deductions in the taxation of corporate treasury activities and to clarify the criteria for such deductions

 

  •  A further iBond issue of up to HKD 10 billion with a maturity of three years is to be issued targeting Hong Kong residents

 

  • The Stamp Duty for the trading of all exchange traded funds is to be waived


 

    An ageing population

     

    An ageing population

     

    • From 2014-15 onwards, the Government will increase its annual expenditure with additional funding of more than HKD 660 million to implement and enhance elderly services and facilities

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Ayesha M. Lau, Partner in charge, Tax - HKSAR

Ayesha M. Lau

Partner in charge,
Tax - HK SAR

+852 2826 8028

hkbudget@kpmg.com