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Hong Kong Budget Summary 2012 - 2013
Hong Kong Budget Summary 2012 - 2013
On 1 February 2012, the Financial Secretary, John Tsang Chun-wah, delivered his fifth Budget Speech to the Legislative Council. KPMG China's Budget Summary outlines the proposed changes and comments on their implications.
Economic performance
- Surplus for the year of HK$66.7 billion is well ahead of the forecast deficit of HK$8.5 billion (revised forecast figure after additional measures were announced on 2 March 2011). The 2011 surplus was driven by the significant increase in land sales and Profits Tax and Salaries Tax collections.
- Key Government concerns for 2012-13 are: (i) preventing the risk of an asset-price bubble; (ii) easing the burden of inflation; and (iii) preparing Hong Kong for the challenges ahead.
- Measures worth nearly HKD 80 billion were proposed for education, medical services, social welfare, housing, infrastructure and livelihood policy areas and the promotion of economic development.
Infrastructure
- The Government announced a series of infrastructure developments, with a record HKD 184 billion to be spent on capital works devoted to projects such as the Ten Major Infrastructure Projects, cross-boundary facilities and transport infrastructural projects.
Corporate relief measures
- Profits Tax for 2011-12 to be reduced by 75 percent up to a maximum of HKD 12,000.
- Capital duties levied on local companies to be abolished.
- Import and export declaration charges to be halved.
- Waiver of business registration fees for 2012-13.
Individual relief measures
- Salaries Tax (and tax under personal assessment) for 2011-12 to be reduced by 75 percent up to HKD 12,000 and increases in personal allowances.
- Increase in deductions from HKD 12,000 to HKD 15,000 for mandatory MPF contributions.
- Electricity subsidy of HKD 1,800 per residential electricity account.
- Rates exemption for one year capped at HKD 2,500 per quarter.
- An extra allowance equivalent to one month's payment for CSSA and Old Age Allowance and Disability Allowance recipients.
Other measures
- Additional issue of iBonds worth HKD 10 billion with a maturity period of three years targeting Hong Kong residents.
- Enhancement of the existing SME Financing Guarantee Scheme.
- Hong Kong Mortgage Corporation to introduce a microfinance pilot scheme.
- Public consultation to be conducted in first quarter of this year on the proposed legislation to level the playing field for Islamic finance.