2010/2011 Hong Kong Budget
Highlights 

• 2.7% decrease in GDP in 2009.  4% to 5% increase in GDP in real terms is forecast for 2010.  Medium term annual average growth rate over the period from 2011 to 2014 is estimated to be 4% in real terms.
    
• Inflation rate for 2009 was 0.5%; expected to be 2.3% in 2010.
    
• A revised consolidated budget surplus of $13.8 billion is forecast for 2009/10, as compared with the original $39.9 billion deficit forecast this time last year for the same period.  The $13.8 billion is made up of a $19 billion surplus on the operating account, less a $1.7 billion deficit on the capital account and the repayment of bonds and notes in the amount of $3.5 billion.
    
• A consolidated budget deficit of $25.2 billion is forecast for 2010/11.  By 2014/15, a consolidated surplus of $5.5 billion is forecast, comprising a surplus of $36.9 billion on the operating account, a deficit of $21.7 billion on the capital account and the repayment of bonds and notes of $9.7 billion.  At the end of 2014/15, the Government is projecting it will have fiscal reserves of around $468.7 billion, approximately equivalent to 15 months of government expenditure.
    
• Operating expenditure for 2009/10 is forecast to be $236 billion.  Going forward, while total public expenditure will be kept at not higher than 20% of GDP, operating expenditure is projected to increase broadly in line with economic growth to $294.2 billion in 2014/15.
    

Profits Tax        

• The profits tax rates for companies and unincorporated businesses remain unchanged at 16.5% and 15% respectively.
    
• Expand the concessionary profits tax rate for qualifying debt instruments to cover those instruments with a maturity period of less than three years, and relax the requirements that such debt instruments be issued to the public in Hong Kong.
    
• Accelerated 100% tax deduction for capital expenditure on environment-friendly vehicles.
    
• Tax deduction for capital expenditure on purchasing of registered trademarks, copyrights and registered designs.
    
• Certain enhancements to the profits tax exemption for offshore funds.

Salaries Tax 

• No change in marginal tax rates and marginal tax bands.
    
• No change in the standard tax rate.  No change in personal allowances.

Government Duties

• Increase stamp duty rate on transactions of properties valued over $20 million from 3.75% to 4.25%.  Buyers will no longer be allowed to defer stamp duty payment on such transactions.
    
• Extend the stamp duty concession in the trading of exchange traded funds to cover funds that track indices comprising not more than 40% of Hong Kong stocks.
    
• Abolition of duty-free concessions on tobacco products for incoming passengers; possible need for phased increase in tobacco duty to be considered in future.

One-off Measures

• Waiver of 75% of salaries tax and tax under personal assessment for 2009/10, subject to a ceiling of $6,000, deducted from the taxpayer's final tax payable for the year.
    
• Waiver of rates for 2010/11, subject to a ceiling of $1,500 per quarter for each rateable tenement.
    
• Waiver of business registration fees for one year.
    
• Pay two months' rent for public housing tenants.
    
• Provide one more month of Comprehensive Social Security Assistance (CSSA) payment, Old Age Allowance and Disability Allowance.
    
• Provide a $1,000 allowance to students receiving CSSA or student financial assistance.

Others

• Promote development in the four traditional pillar industries and the six industries with clear advantages including allocating $1 billion for the Matching Grant Scheme for tertiary institutions, allocating $41 million in the next two years to support the work of the Hong Kong Council for Testing and Certification and the Hong Kong Accreditation Service and setting up a $300 million Pilot Green Transport Fund.
     
• Various expenditure measures to help the needy including a subsidy for internet access charges in the 2010 academic year for children in need, additional funding for providing extra nursing home places for the elderly and enhancing services for the disabled; estimated recurrent expenditure on education, healthcare and social welfare will be $130 billion - equal to 56% of total government recurrent expenditure.
    
• Continue to invest in infrastructure - the estimated capital works expenditure for 2010/11 will be $49.6 billion.
    
• Various measures to ensure a healthy and stable development of the property market.