Hong Kong Budget | KPMG | GLOBAL

Hong Kong Budget

Hong Kong Budget

On 22 February 2017, the Honourable John C Tsang, Hong Kong Financial Secretary, delivered his ninth Budget Speech to the Legislative Council.

On 22 Feb, the Honourable John C Tsang delivered his 9th Budget Speech to the Legco.

KPMG Commentary

The Financial Secretary, the Honourable John C Tsang, presented his ninth Hong Kong Budget speech on 24 February 2016. In terms of overall economic performance in 2015, the Financial Secretary reported a headline inflation rate of 3 percent, with the underlying inflation rate at 2.5 percent. Looking ahead, he forecast that the headline inflation rate for 2016 will be 2.3 percent, with the underlying inflation rate at 2 percent. The Financial Secretary also announced an overall budget surplus forecast of HKD 30 billion for 2015/16.

The Budget speech reflects in many ways a ‘business as usual’ approach, with few substantial new or longer term initiatives introduced or flagged. One-off relief measures such as reductions in Profits Tax and Salaries Tax payable for 2015/16, increases in personal allowances, and waivers of rates and fees continue to be a recurring theme. Particular industries highlighted for additional/specific support included the tourism industry.

The Financial Secretary also discussed what he described as the ‘New Economic Order’. In his view, key to embracing this is nurturing innovation, and he highlighted a series of achievements and future initiatives. He also mentioned KPMG as being one of the international firms which have chosen to establish laboratories and incubation programmes in Hong Kong. Unfortunately, however, the proposals stopped short of where certain other jurisdictions have particularly headed, for example, in the case of tax incentives for research and development activities.

While many of the one-off or short-term measures are welcome, there continues to be little in the way of obvious long-term/strategic focus on the part of government. The key exceptions to this are the Housing Reserve set up in support of public housing development, the HKD 200 billion set aside for the 10-year hospital development plan, and the Future Fund. All of these are positive moves. On a separate note, we look forward to the government’s early implementation of the few new matters raised, as well as those raised in prior years.

Download the Budget Summary to find out more.

© 2017 KPMG Huazhen LLP — a People's Republic of China partnership, KPMG Advisory (China) Limited — a wholly foreign owned enterprise in China, and KPMG — a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Connect with us

KPMG partners comment on the Hong Kong Budget announcement

KPMG partners Michael Olesnicky and Stanley Ho discuss key highlights from the Hong Kong Budget and share KPMG’s view on the proposed set-up of a Tax Policy Unit

Watch the video

KPMG China survey highlights and proposals

We summarise how the 2017-2018 Budget proposes to address some of the concerns identified in the KPMG survey of over 200 senior Hong Kong-based executives.

Read more

Latest publications

Hong Kong Tax Alert

This is an adhoc newsletter covering topical tax issues in Hong Kong.

Read more

China Tax Alert

This is an adhoc newsletter each covering new issues affecting businesses in China.

Read more

China Tax Weekly Update

This publication provides a simple summary of the latest Chinese tax and regulatory...

Read more

International Tax Review - China Looking Ahead (6th Ed)

In this edition, our tax specialists examine recent developments in Chinese tax law...

Read more

China’s digital economy becomes the economy itself

China tax in the digital age - Issue 1, July 2016

Read more

Hong Kong Banking Outlook 2017

This update forecasts developments and trends affecting Hong Kong’s banking sector in 2017

Read more

Opportunities for Chinese and foreign businesses

KPMG’s analysis of the Outline, and its implications for FDI and ODI opportunities

Read more

Now or Never - 2016 CEO Outlook

The 2016 China CEO Outlook surveyed 129 CEOs in China, and offers insight ...

Read more