Latest Hong Kong Government Grants in Response to COVID-19
6 minute read
The Hong Kong Special Administrative Region Government has taken some exceptional measures to deal with this unprecedented situation. Costing a total of HK$287.5 billion.
With specific measures supporting enterprises by providing subsidy schemes, cash flow support and waivers. Some highlights include:
- – Reduce profits tax by 100% in Year of Assessment
(YA) 2019-20, subject to a ceiling of $20,000.
- – Waive rates for non-domestic properties in 2020-21,
subject to a ceiling of $5,000 per quarter in the first
two quarters, and a ceiling of $1,500 per quarter in the
remaining two quarters.
- – Waive registration fees for annual returns charged by
the Companies Registry for 2 years.
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The recent COVID-19 pandemic has had detrimental influence on the global economy, with very few regions left untouched.
In response to the economic impact, the Hong Kong government has announced a new plan for a series of financial reliefs to help businesses through this difficult period.
If you haven’t been following the new as closely, this article will break down the announcement and highlight the key areas that might be beneficial for you and your business.
What was announced?
In addition to the $30 billion Anti-epidemic Fund approved by Legislative Counsel on 21 February, the Hong Kong government has further announced a $120 billion relief package as a response to help businesses to stay afloat, retain workers in employment, relieve financial burdens of individual and business, as well as to facilitate the economy to recover once the epidemic is contained.
What are the key benefits for SMEs?
In the same report, the Hong Kong government announced a series of measures including rental concessions, fee waivers, provisions of loans and loan repayment deferral to reduce SME financial burdens.
Exports and trade
Strong growth was recorded in merchandise export and offshore trade too. This was mainly due to the hectic growth in the mainland economy and the surge in intra-regional trade.
Additionally, enhanced competitiveness of Hong Kong’s exports, underpinned by the distinct weakening of the US dollar and further domestic cost adjustment, as well as deriving from increasing competitiveness of mainland products in the world market, rendered an additional boost to the export performance and trade.
1) Enhance SME Financing Guarantee Scheme
- Raise maximum loam amount per enterprise
|Original amount||Updated amount|
|80% guarantee||$15M ->||$18M|
|90% guarantee||$6M ->||$8M|
|100% guarantee||$2M ->||$4M|
- Provide concessionary interest at a rate up to 3% for one year for loans under 80% and 90% Guarantee
- Extend application period and eligibility to publicly-listed companies
- Raising the guarantee commitment for the Special 100% Guarantee Product from $20 billion to $50 billion to meet businesses’ demand
- In totality, the 3 schemes are provided with Government guarantee commitment of $183 billion
2) Easing the cash flow and burden of businesses and individuals
- To expand the scope of the above rental concessions and waiver fee concessions to more businesses/organisations not covered by previous rounds of helping measures, such as depots, driving schools, regulators’ offices for public transport operators and advertising signboards.
- To extend the 75% waiver of water and sewage charges payable by non-domestic accounts for another four months from August to November 2020, subject to a monthly cap of $20,000 and $12,500 respectively per account. This waiver is an extension of the eight months’ waivers already offered. About 250 000 non-domestic accounts will benefit
- To grant one-off interest-free deferral of loan repayment for two years to self-financing post-secondary institutions under the Start-up Loan Scheme, non-profit-making international schools and students receiving loans from the Working Family and Student Financial Assistance Agency (WFSFAA)
3) Deadline for payment of tax for year of assessment 2018/19 that will be falling due will be automatically extended for three months
Hong Kong Fiscal Impact
Total cost of the package amounts to $137.5 billion, including –
- $135.7 billion additional expenditure of 109.5 billion to the Anti-epidemic Fund, $11.7 billion to the Loan Guaratee Scheme and $3.2 billion to CSSA
- $1.8 billion revenue forgone from rental concessions, fee waivers, provision of loans and loan reyament deferrals.
- These additional measures, assuming all payouts in 2020-21, will enlarge the budget deficit for 2020-21 from $139.1 billion to $276.6 billion, that is, from 4.8% of GDP to 9.5% of GDP
Currently, we are still waiting for the Hong Kong government to further announce the next steps of implementation on the reliefs method. But we can assume that these measure will be taken very soon to help companies of all sizes.
Find more updates at Government news regarding COVID-19 here.