Hong Kong Budget 2024-2025: Key Takeaways for Employees and Employers

Hey there! Welcome to another installation of the Budget series by Talenox. Here are our recent writings: the Singapore Budget 2024 and the Malaysia Budget 2024. Similarly, the Hong Kong Budget 2024-2025, presented by Financial Secretary Paul MP Chan, brings significant changes and initiatives aimed at fostering economic growth, supporting businesses, and enhancing the lives of citizens… and it’s a really long read. Hence, this article delves into the budget’s highlights relevant to business owners, SMEs, HR managers, and employees like you. Let’s dive into the highlights and see how these changes can help you in the coming year.

Introduction

So, Hong Kong is bouncing back from the pandemic, and things are looking up. The theme for this year’s budget is “Advance with Confidence. Seize Opportunities. Strive for High-quality Development.” Sounds pretty inspiring, right? The government’s really pushing to make the most of Hong Kong’s strengths and set the stage for some serious growth.

Economic Situation and Outlook

Economic Recovery and Growth

Last year, Hong Kong’s economy grew by 3.2%. That’s pretty solid, especially considering everything we’ve been through. Private consumption and investment picked up, and visitor numbers soared. The unemployment rate even dropped to 2.9%. Looking ahead, the economy is expected to grow by 2.5% to 3.5% in 2024. Not too shabby!

Hong Kong’s economic recovery has been marked by robust growth in private consumption expenditure, which increased by 7.3% in 2023. This growth was largely supported by government initiatives such as the Consumption Voucher Scheme and activities like “Happy Hong Kong” and “Night Vibes Hong Kong.” Furthermore, overall investment expenditure rebounded by 10.8% alongside the economic recovery.

The significant rebound in visitor arrivals, which reached about 34 million in 2023, played a crucial role in the economic revival. This surge in tourism boosted the exports of travel services by 21.2%, demonstrating a strong recovery in the tourism sector.

However, despite these positive trends, Hong Kong’s export performance was challenged by the difficult external environment, resulting in a notable 10.3% decline in total goods exports in 2023.

Challenges and Opportunities

Of course, there are always bumps in the road. Geopolitical tensions and high interest rates are still challenges, but Hong Kong’s strategic location and focus on innovation and technology offer some exciting opportunities. 

The global economic landscape scene is a bit shaky, with ongoing geopolitical tensions impacting international trade and capital flows. The financial conditions in advanced economies have been tightened significantly over the past two years, which has constrained economic growth. However, there is optimism that the US Federal Reserve might start cutting interest rates this year, which could give things a boost.

In the medium term, Hong Kong’s economy is expected to see sustained and solid development. The National 14th Five-Year Plan has set clear goals for Hong Kong’s development, positioning it as a key player in the “Eight Centres” strategy. Leveraging its unique advantages under the “One Country, Two Systems” framework, Hong Kong aims to proactively integrate into the overall national development strategy, aligning with the country’s focus on high-quality development.

Fiscal Policies and Tax Measures

Fiscal Consolidation Strategy

The government is tightening its belt a bit to address the fiscal deficit. They’re aiming for a balanced budget through careful spending and increased revenue. It’s all about making sure Hong Kong’s finances are solid for the long haul.

This involves a thorough evaluation of public finances and the adoption of measures to enhance revenue while controlling spending. By doing so, the government aims to ensure sustainable public finances in the long term.

Tax Reductions and Concessions

• Salaries Tax Reduction:You’ll get a 100% reduction in salaries tax for the 2023/24 assessment year, up to HK$3,000.
• Profits Tax Reduction: Businesses get a 100% reduction in profits tax for 2023/24, also capped at HK$3,000.
• Rates Concessions: There are rate concessions for both domestic and non-domestic properties for the first quarter of 2024/25.

These tax breaks should help lighten the load a bit and put more money back in your pocket.

Support for Small and Medium Enterprises (SMEs)

SME Financing Guarantee Scheme

Good news for SMEs! The application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme is extended to March 2026, with an extra HK$10 billion in the pot. This should help ease cash flow problems and keep businesses running smoothly.

The SME Financing Guarantee Scheme is a critical support mechanism for small and medium-sized enterprises facing capital-flow challenges. By extending the application period and increasing the total guaranteed commitment, the government aims to provide SMEs with the necessary financial support to maintain their operations and invest in growth opportunities.

Digital Transformation Support

If you’re in the food and beverage or retail sectors, listen up. The Digital Transformation Support Pilot Programme offers subsidies to help you adopt digital solutions. This is a great chance to modernise your operations and connect better with customers.

Note that the Digital Transformation Support Pilot Programme will focus on three areas: 1) digital payment and shopfront sales, 2) online promotion, and 3) customer management solutions. 

BUD Fund Enhancements

The dedicated fund on Branding, Upgrading, and Domestic Sales (a.k.a. BUD Fund) is getting a HK$500 million boost. This fund helps SMEs expand into Mainland and overseas markets. 

We like this – because the BUD Fund has been instrumental in helping SMEs enhance their competitiveness and tap into new markets. The additional funding and the introduction of the “E-commerce Easy” initiative will provide further support for SMEs to leverage e-commerce platforms, reach a broader customer base, and boost their sales. Perfect timing to tap into the e-commerce boom!

Innovation and Technology

Investment in I&T Development

The government is all in on innovation and technology.

Firstly, they’re expanding the Hong Kong Science Park and Cyberport to give I&T companies more space and resources.

Secondly, there’s also an AI Supercomputing Centre and an AI Subsidy Scheme coming up to support local research and innovation. Exciting times we live in!

Green and Sustainable Development

Green Finance Initiatives

Hong Kong is aiming to be a top green finance centre. The Green and Sustainable Finance Grant Scheme is extended to 2027, encouraging industries to go green. If you’re into sustainable practices, this is your moment to shine.

The Green and Sustainable Finance Grant Scheme covers transition bonds and loans to support industries moving towards decarbonisation.

Green Technology and Infrastructure

• Green Tech Fund: This supports R&D in green technology.
• Green Maritime and Aviation: There are incentives for sustainable practices in the maritime and aviation sectors.

Additionally, in the maritime and aviation sectors, incentives for green practices will encourage the adoption of sustainable fuels and technologies, reducing the environmental impact of these industries.

Labour Market and Talent Attraction

Top Talent Pass Scheme (TTPS)

To attract global talent, the TTPS will continue to offer favourable conditions for skilled professionals. Over 140,000 applications have already been approved, and many talents are now contributing to Hong Kong’s growth.

We see that the Top Talent Pass Scheme has been highly successful in attracting skilled professionals from around the world. By offering benefits such as streamlined immigration processes and support services, we can only hope that the scheme continues to ensure that Hong Kong remains an attractive destination for global talent.

Hong Kong Talent Engage (HKTE)

The HKTE will provide one-stop support services for new talents, including organising global summits to promote Hong Kong as a top international talent hub. This initiative is all about making it easy for top talent to move to and thrive in Hong Kong.

Some of these services include assistance with relocation, integration into the local community, and professional development opportunities. 

Infrastructure and Urban Development

Smart City Initiatives

The government is pouring money into smart city projects to make urban living more efficient and sustainable. Think intelligent transport systems and smart buildings. These projects will not only improve our quality of life but also attract more investment.

Boosting Tourism and Hospitality

Mega Events and Festivals

Hong Kong is set to host a slew of mega events and festivals to boost tourism and the local economy. These events will not only attract tourists but also highlight Hong Kong’s vibrant culture and international appeal.

Just look at the amount of tourist spending generated from Taylor Swift’s Southeast-Asian “exclusive arrangement” concert held in Singapore.

Support for the Hospitality Industry

The hospitality industry has been severely impacted by the COVID-19 pandemic. To help it bounce back, the government is rolling out marketing campaigns, financial assistance, and training programs. This support will help hotels and tourism businesses recover and thrive.

FAQs

What are the main highlights of the Hong Kong Budget 2024-2025 for businesses?

The Hong Kong Budget 2024-2025 includes tax reductions, fiscal consolidation measures, support for SMEs through the SME Financing Guarantee Scheme, and initiatives to promote innovation and technology. These measures aim to support business growth, enhance competitiveness, and foster economic recovery.

How will the budget support SMEs in Hong Kong?

The Hong Kong Budget 2024-2025 extends the SME Financing Guarantee Scheme, provides subsidies for digital transformation, and enhances the BUD Fund. These initiatives aim to address capital-flow problems, support digital adoption, and help SMEs expand into new markets.

What initiatives are included in the budget to promote innovation and technology?

The Hong Kong Budget 2024-2025 includes investments in expanding the Hong Kong Science Park and Cyberport, launching an AI Supercomputing Centre, and introducing an AI Subsidy Scheme. These initiatives aim to foster a vibrant innovation ecosystem and support scientific research and development.

What measures are included in the budget to attract global talent?

The Hong Kong Budget 2024-2025 continues to support the Top Talent Pass Scheme and introduces the Hong Kong Talent Engage initiative. These measures provide favourable conditions for skilled professionals and offer comprehensive support services to attract and retain top talent in Hong Kong.

How does the budget address environmental sustainability?

The Hong Kong Budget 2024-2025 extends the Green and Sustainable Finance Grant Scheme and supports green technology and infrastructure projects. These initiatives aim to promote green finance, support R&D in green technology, and encourage sustainable practices in the maritime and aviation sectors.

Conclusion: Why Choose Talenox?

As Hong Kong’s business landscape evolves with the new budget measures, having a reliable and efficient HR platform is crucial. Talenox specialises in automating payroll and time-off management, ensuring compliance with Hong Kong’s regulations.

Thousands of companies already trust Talenox to handle their HR needs, and for good reason. The platform offers an incredibly easy migration process from other software, so you won’t have to worry about a complicated transition. Plus, there are no setup fees or hidden costs—what you see on our pricing page is exactly what you’ll pay. Whether you’re a small business owner or an HR manager at a larger company, Talenox provides the tools and support you need to manage your team effectively and efficiently. So, why not save hours of your time by giving Talenox a minute?