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.

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Hong Kong Budget Summary 2012 - 2013

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.

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