China

Hong Kong Budget Summary 2013 - 2014 

www.kpmg.com/cn/en/hk-budget for the latest updates.

Economic Performance

 

  • The surplus for 2012-13 is approximately HKD 64.9 billion - well ahead of the forecast deficit of HKD 3.4 billion. The surplus has been driven by significant increases in Land Premiums, Profits Tax and Stamp Duty collections.

  • A modest improvement in the economy is forecast with GDP growth of 1.5 to 3.5 percent for 2013.

  • The 2013 headline inflation rate is estimated at 4.5 percent.

  • Budget proposals include one-off measures worth HKD 33 billion to ease pressure on the middle class, grass roots and SMEs. Capital expenditure of HKD 88 billion includes HKD 70.1 billion on capital works.

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Financial Services

 

  • The Profits Tax exemption for offshore funds is to be extended to cover investments in some private companies.

  • Legislative amendments are being considered to introduce the Open-ended Investment Company, an increasingly popular form of investment vehicle used in the Funds industry.

  • The Profits Tax rate on the offshore insurance business of captive insurance companies to be reduced in line with the tax concession currently available to reinsurance companies.

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Tax Concessions and One-off Measures

 

  • A reduction in Salaries Tax and tax under personal assessment for 2012-13 of 75 percent capped at HKD 10,000.

  • An increase in basic and additional child allowances from HKD 63,000 to HKD 70,000 per child.

  • An increase in the deduction ceiling for self-education expenses from HKD 60,000 to HKD 80,000.

  • A subsidy of HKD 1,800 to each electricity account.

  • A waiver of rates for 2013-14 capped at HKD 1,500 per quarter.

  • Profits Tax for 2012-13 to be reduced by 75 percent subject to a ceiling of HKD 10,000.

  • Business registration fees for 2013-14 are to be waived.

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Infrastructure and Housing

 

  • Capital expenditure estimated to increase to over HKD 70 billion next year, far exceeding the average annual expenditure of around HKD 40 billion over the past five years.

  • The 2013-14 Land Sale Programme includes 46 residential sites capable of providing 13,600 units. All major sources of land supply are forecast to provide land capable of building about 25,800 private residential flats.

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