Hong Kong Budget 2024-25 – Highlights for Businesses and HR Leaders

On 28 February 2024, Hong Kong’s Financial Secretary, Paul Chan Mo-po announced the 2024-2025 Hong Kong Budget. Themed “Advance with Confidence. Seize Opportunities. Strive for High‑quality Development.”, Paul Chan estimates that the government expenditure for the 2024-2025 financial year will increase by roughly 6.7% to HK$776.9 billion.

Below are crucial budget highlights from the 2024 budget that businesses and HR leaders should be aware of:

1. Increased tax for high-income earners

  • The standard rate of 15% will continue to apply to the first HK$5 million of net income, while any portion exceeding HK$5 million will be subject to the standard rate of 16%.
  • This is expected to affect 12,000 taxpayers – or 0.6% of the total of individuals paying salaries and personal assessment taxes.

2. Reduced salaries tax and profits tax

  • The salaries and profits taxes will be slashed by 100%. This is subject to a ceiling of HK$3,000, which is half of last year’s HK$6,000.

3. Hong Kong Budget provides funding & measures to nurture and attract talent

  • HK$134 million will be allocated over the next two years to empower each publicly funded primary school with up to HK$300,000, aimed at igniting student enthusiasm towards innovation and technology.
  • Funding will also be continued for talent schemes for professionals within sectors such as healthcare, maritime and aviation, patent, and legal fields.
  • For international legal talent, the Department of Justice (DoJ) will establish a dedicated office and an expert group to advance the creation of the Hong Kong International Legal Talents Training Academy in 2024.
  • HK$12 million will be allocated to the Intellectual Property Department (IPD) over the next three years to facilitate the implementation of regulatory arrangements for local patent agent services.
  • Introduction of the Professional Training on Smart and Green Logistics Scheme and the Logistics Promotion Funding Scheme under the Maritime and Aviation Training Fund (MATF).
  • Launching of the Aviation Promotion Project Funding Scheme to support activities organised by local aviation-related organisations and academic institutions.

4. Fostering growth in the financial sector

  • HK$100 million from the Hong Kong budget has been pledged towards promoting sustainable development in the financial services sector and various aspects of it, such as green and sustainable finance, fintech innovation, asset and wealth management, as well as the development of headquarters business and risk management capabilities.

5. Bolstering R&D efforts in microelectronics

  • The Hong Kong Budget will see the Hong Kong Microelectronics Research and Development Institute established in late 2024.
  • The institute will function as a central hub for collaborative research focused on third-generation semiconductors, facilitating partnerships among universities, R&D centers, and industry stakeholders.

6. Various initiatives for life science & healthcare

  • InnoLife Healthtech Hub is slated to be established at the Hong Kong-Shenzhen Innovation and Technology Park located at the Lok Ma Chau Loop, with an allocation of HK$2 billion to bolster research clusters at the Hong Kong Science Park, facilitating their setup within this innovative hub.
  • A new Greater Bay Area International Clinical Trial Institute will be set up in the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. Its goal is to provide all-in-one support, making it easier for local, Mainland China, and overseas pharmaceutical and medical device companies to conduct clinical trials in Hong Kong.
  • The 2024 budget also will provide for enhancements to healthcare‑related teaching facilities, increasing the number of local training places as appropriate.

7. HK$3 billion for AI supercomputing centre

  • Business park Cyberport is spearheading the establishment of an AI supercomputing center to address the growing demand for enhanced computing capabilities in both research institutes and industries.
  • To support this initiative, the government will allocate HK$3 billion from the Hong Kong budget to Cyberport for the launch of a three-year AI Subsidy Scheme.
  • This scheme is designed to assist local universities, research institutes, and enterprises in harnessing the center’s computing power to facilitate scientific breakthroughs.

8. Tech industries to benefit from HK$10 billion scheme

  • The HK$10 billion New Industrial Acceleration Scheme aimed at bolstering companies specialising in various sectors including life and health technology, artificial intelligence and data science, advanced manufacturing, and new energy technology will be introduced in 2024.
  • The government will offer a maximum funding of HK$200 million on a matching basis, with one part allocated by authorities for every two parts contributed by the enterprises.
  • Applicants must invest at least HK$200 million in the city to be eligible for the scheme which is expected to attract 50 to 100 firms.

9. SMEs to receive added funding and undergo digital transformation

  • The application period for the 80% and 90% guarantee products of the Small and Medium-sized Enterprises (SMEs) Financing Guarantee Scheme will be extended for two years to aid SMEs in managing their capital flows.
  • SMEs operating in the food and beverage and retail sectors will have the opportunity to participate in the digital transformation support pilot programme in early 2024 to select suitable options from a range of ready-to-use digital solutions and apply for subsidies on a matching basis.
  • Digital solutions provided will concentrate on three key areas: digital payment and shopfront sales, online promotion, and customer management solutions, benefiting at least 8,000 SMEs.
  • An additional HK$500 million will be injected into the Dedicated Fund on Branding, Upgrading, and Domestic Sales (BUD Fund) to aid SMEs in enhancing their competitiveness, and accessing Mainland China and overseas markets.

10. HK$40 billion allocated for overseas firms

  • To attract overseas enterprises and funding to support Hong Kong’s economic development, a total investment of HK$40 billion from the 2024 budget will be set aside for about a dozen non-local firms.
  • 30 other firms that had previously committed to expanding in the city will also receive investment, creating an estimated 13,000 jobs over the next few years.

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For further information on the 2024-25 Hong Kong Budget, please head over to the official government website: https://www.budget.gov.hk/2024/eng/

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