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What Do SMEs Need To Know About Budget 2021?

The COVID-19 pandemic has taken a toll on businesses in Hong Kong, posing multiple challenges to your business. With Budget 2021, the Hong Kong government has introduced various measures to help support you and your business, and facilitate long-term growth of all Hong Kong companies.

We know you are concentrating on sustaining and growing your business at the moment. If you are looking for ways to outsource accounting in Hong Kong, we can help you put your paperwork together, check numbers, and file annual returns on time. Our Chartered Accountants in Hong Kong answer fast and can help you optimise your taxes all from the comfort of your smartphone.

In the meantime, this is how the Hong Kong Budget 2021 can assist in your business growth.

Immediate One-off Support for Enterprises

The outbreak of the pandemic forced many businesses to completely shut down during Hong Kong's four lockdowns since last year's budget. This has impacted business growth, and the Hong Kong government recognised this by allocating approximately HK$9.5 billion to implement these measures:

  1. Two-Tier Profits Tax Regime Remains Unchanged

Under this tax regime, the profits tax rate for the first HK$2 million of assessable profits will remain unchanged at 8.25% for companies and 7.5% (half of the 15% standard rate) for unincorporated businesses.

  1. Waived Profit & Salaries Tax

According to the 2021-22 Budget, 100% of profits tax for the year of assessment 2020/21 is waived, subject to a ceiling of HK$10,000 per case.

According to the 2021-22 Budget, 100% of profits tax for the year of assessment 2020/21 is waived, subject to a ceiling of HK$10,000 per case.

Waive 100% of salaries tax and tax under personal assessment for 2020/21, subject to a ceiling of HK$10,000.

  1. Low-interest Loan

If you’re in need of a loan, the Hong Kong government is offering up to HK$6 million low-interest loan with a special 100% Guarantee Product with an extension in time and flexibility. The maximum repayment period is increased from five to eight years. Companies have till the end of 2021 to apply for the loan.

  1. Extension of the Pre-Approved Principal Payment Holiday Scheme

The Pre-Approved Principal Payment Holiday Scheme (PPPHS) is meant to ease the cashflow pressure faced by businesses who are affected by the pandemic. Banks in Hong Kong will offer principal payment holidays to covered corporate borrowers. The PPPHS will be extended by an additional six months, to October 2021.

The Pre-Approved Principal Payment Holiday Scheme (PPPHS) is meant to ease the cashflow pressure faced by businesses who are affected by the pandemic. Banks in Hong Kong will offer principal payment holidays to covered corporate borrowers. The PPPHS will be extended by an additional six months, to October 2021.

If your business falls under these requirements, you are eligible:

  1. Annual sales turnover not exceeding HK$800 million
  2. No seriously overdue loan payments
  3. Not in the process of ceasing operations, declaring bankruptcy or liquidation

Banks will inform eligible customers of the pre-approval under the Scheme and eligible borrowers are only requested to contact the bank within 14 days of the bank’s notice to confirm the detailed arrangements of the deferment.

  1. Waiver of Business Registration Fees

The Hong Kong Financial Secretary initiated waiving business registration fees in 2021 - 2022, which will commence from 1 April 2021. To effect this measure, the Hong Kong Government will introduce the legislative amendment into the Legislative Council as soon as possible.

  1. Support for Asset Management and Family Office Business

Plans to provide subsidies covering 70% of the expenses paid to local professional service providers for open-ended fund companies set up or re-domiciled in Hong Kong over the next three years, up to a limit of HK$1 million per open-ended fund company.

The government will also provide one-stop support to family office business and review relevant tax arrangements.

Stimulate the economy for businesses to thrive

In a bid to boost the local economy, the Hong Kong Government has implemented relief measures to encourage tourism and local spending.

  1. Facilitate Digitalisation

A total investment of HK$375 million will be allocated to the Hong Kong Trade Development Council (HKTDC) to boost its capability to proceed with digitalisation and organise online activities, to benefit businesses like yours in times where the Government is advocating for the public to stay home.

  1. More Funds to Enter Diversified Markets

To further support local businesses like yours, the Hong Kong Government will inject HK$1.5 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD fund).

Additionally, the funding ceiling for each company has been raised from HK$4 million to HK$6 million, in order to support businesses’ foray into the more diversified markets as they utilise the better protection offered by the International Physical Protection Advisory Service (IPPAs).

  1. Spurring Innovation and Technology

Since 2018, the Hong Kong Government has been supportive of the Innovation and Technology development and invested over HK$100 billion in this aspect. To further encourage growth in this area, Budget 2021 will implement measures including:

  • The injection of HK$9.5 billion for Innovation and Technology Fund by two yearly instalments.
  • Hong Kong Monetary Authority will consider enhancing its Fintech Supervisory Sandbox to minimise time for launching innovative financial products in the market

Thrive in a Time of Crisis

We know how difficult it is to navigate your business through the coronavirus crisis. Let Osome take some routine tasks off your workload, with experts who are always there for you. We offer accounting and corporate secretarial services in Hong Kong from wherever you are working from. They know what to file, which reliefs you’re entitled to, and handle the documents. Just message your question in a chat, they respond daily and answer to the point, so you can focus on the tasks that matter.

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