22 February 2023
Summary
On 22 February 2023, the Financial Secretary of Hong Kong, Mr. Paul Chan, announced the Hong Kong 2023/24 Budget (the “Budget”). The theme of this year’s Budget is “Leaping Forward Steadily, Together We Bolster Prosperity under Our New Vision”. Although a budget deficit of HK$139.8 billion is expected, the Budget proposed a total expenditure of HK$761 billion of spending – which includes HK$560.2 billion of recurrent expenditures – to assist the public to regain vigour for being hit by the epidemic over the past years and to boost the momentum of the economic revival.
There are various measures in supporting enterprises and the general public. In this newsletter, we highlight the proposals relevant to global mobility tax and immigration areas for discussion.
The Detail
Individual Tax Relief / Measures
In supporting the general public to alleviate the economic pressure, the Budget proposed a one-off relief measure in reducing salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a ceiling of HK$6,000. The reduction will be reflected in the final tax payable for the year of assessment 2022/23.
The Budget proposes to increase the basic Child Allowance and the additional Child Allowance for the year of birth for each child from HK$120,000 to HK$130,000 respectively starting from the year of assessment 2023/24. Taxpayers whose income is assessed under the progressive tax rate would be able to benefit from the increase in these allowances.
We summarize the current and the proposed/new tax rates, allowances and deductions under salaries tax below for your information:
| (HK$) | Current Fiscal Year | Proposed / New |
| Various Personal Allowances | ||
| Child Allowances – 1st to 9th child (each):
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| Dependent Parent/Grandparent Allowance:
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| Additional Dependent Parent/Grandparent Allowance – for residing with taxpayer
· Aged 55-59 · Aged 60 or above |
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| Dependent Brother/Sister – for whom Allowance no child allowance is claimed |
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| Single Parent Allowance |
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| Disabled Dependent Allowance – in addition to any allowances granted to the dependent |
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| Personal Disability Allowance – in addition to any allowances granted to the disabled person |
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| Deduction Ceiling | ||
| Home Loan Interest |
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| Elderly Residential Care Expense |
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| Self-education Expenses |
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| Charitable Donations
[Percentage % x (Income – Allowable Expenses– Depreciation Allowances)] |
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| Mandatory Contributions to MPF / Contributions to other recognised retirement schemes |
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| Contributions to Tax Deductible MPF (TVC) and/or Qualifying Annuity Premiums (QDAP) |
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| Qualifying Premiums paid under Voluntary Health Insurance Scheme (VHIS) |
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| Newly introduced tax deduction for eligible domestic rental expenses from 2022/23 |
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| Tax Waiver | ||
| For Salaries Tax or tax under Personal Assessment |
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Capital Investment Entrant Scheme
A new Capital Investment Entrant Scheme (“Scheme”) will be launched to attract more talents and new capital to Hong Kong. A successful applicant will likely be granted a visa to live and work in Hong Kong without the need of securing a job offer at the time of application based on the immigration policy under the previous Scheme. The amount of capital required and related details will be released by the Hong Kong SAR Government at a later date.
Asset and Wealth Management Centre
The Government will work with regulators to refine the regulatory measures and tax arrangements for the asset and wealth management sector. On wealth management, regulators will, on a risk-based principle and subject to appropriate protection for investors, streamline the suitability assessment and disclosure process for sophisticated or ultra-high net worth individual clients. Moreover, the Government will review the existing tax concession measures applicable to funds and carried interest.
What this means
Despite the deficit budget, individual taxpayers are still entitled to a 100% tax waiver, but capped at HK$6,000, for the year of assessment 2022/23 as a one-off relief measure in supporting the general public on their recuperation. We can see this year’s Budget is prepared in line with the government policy objectives of attracting enterprises and talents and have considered supporting measures to boost Hong Kong’s competitiveness within the region.
In addition, we are glad to see the salaries tax rates have remained the same with an additional increase in the Child Allowances in helping Hong Kong maintain our long-standing advantages of a simple tax regime, which is the foundation of our city’s success.
The introduction of a new capital investment entrant scheme and favourable measures and tax arrangements for the asset and wealth management sector will attract new talents to our labour market and capital into our asset market. These are definitely encouraging and positive announcements. With new capital influx, it will help create jobs as well as opportunities for Hong Kong. More importantly, it will also enrich our talent pool and fill talent gaps.
How we can help
Vialto Partners provide dynamic and innovative solutions to assist employers and companies alike to manage their mobile population, powered by award-winning digital applications. Contact us to find out more.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
• James Clemence, Asia Pacific CEO | james.clemence@vialto.hk
• Theresa Chan, Partner | theresa.chan@vialto.hk
• Adam Chiu, Partner | adam.chiu@vialto.hk
• Louis Lam, Partner | louis.lam@vialto.hk
• Bruce Lee, Partner | bruce.lee@vialto.hk
• Steven Lim, Partner | steven.lim@vialto.hk
Further information on Vialto Partners can be found here: www.vialtopartners.com
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