Hong Kong’s Financial Secretary Paul Chan revealed the latest 2023/24 budget on 22 Feb, which included several relief measures and spending plans aimed at providing relief to residents and boosting the economy. Overall we see relief measures reduced from last year, while living costs continue to rise as inflation persists. Managing finances carefully and investing adequately for the future, particularly for important life goals such as retirement and child’s education become especially important in times like such.
The following are some of the key measures announced:
Tax related
- Profits tax and salaries tax rates will remain unchanged this year;
- Salaries tax and tax under personal assessment for the 2022/23 assessment year will be reduced up to HK$6,000 (down from the HK$10,000 cut last year);
- Rates concession for domestic properties for the first two quarters of 2023/24, capped at HK$1,000 per quarter (down from the full year support last year with the HK$1,500 cut per quarter for Q1-Q2 and the HK$1,000 cut for Q3-Q4);
- Basic child allowance and the additional child allowance for each child born during the year of assessment will rise from HK$120,000 to HK$130,000;
- Tobacco control: duty on cigarettes will increase by 60 cents per stick with immediate effect, the typical cost of a pack of 20 cigarette packs have now risen by HK$12;
- Encourage employment of elderly employees: tax deduction for the Mandatory Provident Fund voluntary contributions made by employers for employees aged 65 or above will double to 200%.
Relief measures
- Consumption vouchers: eligible Hong Kong permanent residents aged 18 or above will receive HK$5,000 electronic consumption vouchers in two instalments, down from HK$10,000 in the previous year. HK$2,500 vouchers will be issued to eligible persons who have come to live in Hong Kong through different admission schemes;
- Social security measures: Eligible recipients will receive extra half-month allowance of the standard Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance, Disability Allowance or Working Family Allowance;
- The Public Transport Fare Subsidy Scheme will be extended until October this year. Currently one third of the commuters’ monthly public transport expenses exceeding HK$200 is subsidised by the government, capped at HK$500;
- The government will hand out a HK$1,000 subsidy to eligible residential electricity account holders, while the existing practice of distributing electricity charges relief of HK$50 per month eligible residential accounts would be extended until the end of 2025;
- The government will cover examination fees for school candidates sitting for the 2024 HKDSE Examination.
Lowered stamp duty
- Current demand-side management measures for residential properties (commonly known as “harsh measures”) will remain unchanged;
- Hong Kongers will enjoy lower stamp duty buying small to medium-sized flats for the first time. Value bands of ad valorem stamp duty payable for sale and purchase or transfer of residential and non-residential properties will be adjusted to below:
Investment related
- The government plans to issue no less than HK$50 billion of Silver Bond and HK$15 billion of retail green bonds in the next financial year;
- A certain proportion of the future issuances of Government green bonds and infrastructure bonds will be earmarked for priority investment by MPF funds.
Measures to attract Enterprises and Talents
- The government will introduce a mechanism to provide facilitation for companies domiciled overseas to move to Hong Kong;
- A new Capital Investment Entrant Scheme to be introduced: applicants may reside and pursue development in Hong Kong after making investment at a certain. amount in the local asset market, excluding property.
Prepare for the future: managing finances and investing in the midst of economic uncertainty
While the 2023 budget provides some relief measures to alleviate the financial burden on citizens, it is important to note that they have been scaled back compared to previous years. With rising living costs due to inflation and economic uncertainty, it is crucial for individuals to take control through managing finances carefully and investing wisely.
Investing in the long-term can help individuals prepare for the future and mitigate the impact of inflation on their finances. By seeking out professional investment services, individuals can receive expert advice and guidance on how to navigate the current economic climate and make informed investment decisions.
At Endowus, we understand the importance of preparing for the future through long-term investing and financial planning. With Endowus, you can plan and manage your money — by investing in carefully curated funds, in globally diversified, intelligent and low-cost portfolios tailored to your needs and goals. To get started with Endowus, click here.
Read more: Financial planning for married couples
Read more: Financial planning through life stages
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