Tax & Immigration
Hong Kong | The 2024-25 Budget—Growth with Global Talent
Summary
On 28 February 2024, the Financial Secretary of Hong Kong SAR, Mr. Paul Chan, announced the Hong Kong 2024/25 Budget (the “Budget”). Setting off at 3.2 per cent economic growth from year 2023 in a challenging environment, the theme of the Budget “Advance with Confidence. Seize Opportunities. Strive for High-quality Development” demonstrates the government’s determination and vision to continue revitalizing the economy confidently with focused areas via a series of measures, especially in attracting global talents and investments, as well as cancelling all decade-long property cooling measures of Special Stamp Duty, Buyers’ Stamp Duty and New Residential Stamp Duty for residential properties with immediate effect.
In this newsletter, we highlight the proposals relevant to global mobility tax and immigration areas for discussion.
The details
Immigration measure updates
| Immigration measure | Development |
| Talent attraction schemes | More than 140,000 applications were approved under various talent admission schemes. About 100,000 of them have already arrived in Hong Kong. |
| The Hong Kong Talent Engage (HKTE) | A Global Talent Summit and the Guangdong Hong Kong Macao Greater Bay Area High Quality Talent Development Conference will be organized in May 2024. |
| The new Capital Investment Entrant Scheme (new CIES) | New CIES will soon invite applications. Eligible investors will invest $27 million or more in qualifying assets and place $3 million into a new CIES Investment Portfolio. |
Individual tax relief and measure
Despite an estimated budget deficit of slightly above $100 billion, the Budget is still proposing a one-off relief to reduce salaries tax and tax under personal assessment for year of assessment 2023/24 by 100%, subject to a ceiling of $3,000. The reduction will be reflected in the final tax payable for year of assessment 2023/24.
The Budget proposed to change the current single standard rate regime to a two-tier standard rate regime where individuals with net income up to first $5,000,000 will be taxed at 15%, and income in excess of $5,000,000 to be taxed at 16%. The progress tax rate system remains at 2% to 17%.
The following is a summary of the current and proposed Tax Rates, Allowances and Deductions under Salaries Tax:
| Current Fiscal year | Proposed | |
| Tax Rates | ||
| Standard rates | 15% |
|
| Progressive rates | From 2% to 17% | No change |
| Various Personal Allowances | ||
| Basic Allowance | $ 132,000 | No change |
| Married Person’s Allowance | $ 264,000 | No change |
| Child Allowances – 1st to 9th child (each):
| $ 260,000 $ 130,000 | No change No change |
| Dependent Parent/Grandparent Allowance:
| $ 25,000 $ 50,000 | No change No change |
| Additional Dependent Parent/Grandparent Allowance – for residing continuously with taxpayer
| $ 25,000 $ 50,000 | No change No change |
| Dependent Brother/Sister Allowance – for whom no child allowance is claimed | $ 37,500 | No change |
| Current Fiscal Year | Proposed | |
| Single Parent Allowance | $ 132,000 | No change |
| Disabled Dependent Allowance – in addition to any allowances granted to the dependent | $ 75,000 | No change |
| Personal Disability Allowance – in addition to any allowances granted to the disabled person | $ 75,000 | No change |
| Deduction Ceiling | ||
| Home Loan Interest* | $ 100,000 | No change |
| Elderly Residential Care Expense | $ 100,000 | No change |
| Self-education Expenses | $ 100,000 | No change |
| Charitable Donations [Percentage % x (Income – Allowable Expenses – Depreciation Allowances)] | 35% | No change |
| Mandatory Contributions to MPF / Contributions to other recognized retirement schemes | $ 18,000 | No change |
| Qualifying Annuity Premiums (QDAP) and/or Voluntary Contributions to Tax Deductible MPF (TVC) | $ 60,000 | No change |
| Qualifying Premiums paid under Voluntary Health Insurance Scheme (VHIS) | $ 8,000 for each insured person | No change |
| Domestic rents deduction from 2022/23* | $ 100,000 annual ceiling | No change |
| Tax Waiver | ||
| For Salaries Tax or Tax under Personal Assessment | 100% waiver, subject to a ceiling of $6,000 | 100% waiver, subject to a ceiling of $3,000 |
* From year 2024/25, increase to $120,000 if taxpayer resides with first child born on or after 25 October 2023 until the child reaches the age of 18.
Other measures
| The Office for Attracting Strategic Enterprises (OASES) | In March 2024, 10+ enterprises will sign a partnership agreement with OASES, confirming setting up or expanding their businesses in Hong Kong or plan to do so. These new or expanded businesses together with the 30 companies from the first batch are expected to bring over $40 billion investment to Hong Kong and over 13,000 new jobs over next few years. |
| Cancelling all decade-long property cooling measures | The following for residential properties will be cancelled with immediate effect:
|
| Comprehensive double taxation agreement | To strengthen Hong Kong’s economic and trade relations with the Middle East, the Government is negotiating with Middle East countries on several trade agreements. In addition, Hong Kong will soon sign a Comprehensive Double Taxation Agreement with Bahrain. |
| Hong Kong Investment Corporation Limited (HKIC)
| The HKIC will attract more IT companies to establish businesses in Hong Kong, encourage enterprises in its investment portfolio to engage more actively in local, Mainland and overseas IT networks, and host a Roundtable for International Sovereign Wealth Funds plus organize a Summit on Start-up Investment and Development. |
| Asset and wealth management industry | The Government will extend the Grant Scheme for Open‑ended Fund Companies and Real Estate Investment Trusts for three years, and set up a task force to discuss with the industry measures for further developing the asset and wealth management industry. |
| Re-domiciliation mechanisms | To leverage on existing fund re-domiciliation mechanisms for Open-ended Fund Companies and Limited Partnership Funds, a legislative proposal will be submitted in first half of 2024, allowing companies domiciled overseas, especially enterprises with a business focus in Asia Pacific, to re‑domicile in Hong Kong. |
Our observation
To manage uncertainties in the fast-changing global economic environment, we welcome the implementation of proactive and targeted initiatives in the Budget to expand Hong Kong’s pool of global enterprises and talents and accelerate economic growth. The cancelling of property cooling measures gives Hong Kong a competitive advantage not only within the region but also on a global scale for attracting global investors, family offices and talents to relocate to Hong Kong with not only potentially more reasonable rental cost but hassle-free entry to invest in the reinvigorated residential property market with significantly lower transaction cost. Employers and global talents should act fast to revisit their business and talent mobility plan and consult your usual Vialto contacts for holistic planning and compliance management.
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
Bruce Lee
Partner
Adam Chiu
Partner
Louis Lam
Partner
Steven Lim
Partner
Further information on Vialto Partners can be found on our website: www.vialtopartners.com
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Contact us on the following address – me-immigration@vialto.com
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