Budget 2020: What Does It Mean For SMEs?

The 2020/21 Hong Kong Budget was issued last month by the Financial Secretary Chan Mo Po last month. Due to the unstable social condition and the coronavirus outbreak, Hong Kong’s economic growth is undergoing a slight depression.

It is a tough time for most of the business operators and giant firms in Hong Kong. On the contrary, it may be the most wanted moment for those small and medium enterprises (SME) as well as start-ups. 
A great risk and uncertainty always come along with great opportunities. Benefitting from the decrease in business set-up costs and other expenses, SME and startup should be aggressive and take the chance to expand their business.

As a business development manager, you should be ready for capturing any chances available in the market. Before you initiate your ambitious plan, let us review and find out the advantages embedded in the Budget 2020 for SMEs.

Benefits in 2020/2021 Budget Plan:

Proposed measure in the near future

Around HK $30 billion will be used for helping small and medium-sized enterprises to maintain their business and cover their loss caused in the past few months.

Taxation Relaxation

In order to stand with those badly influenced firms, profits tax for the year of assessment 2019/20 will be reduced by 100% subject to a ceiling of HK $20,000. 

Rate Reduction

At the same time, the rate for non-domestic properties is waived for all the four quarters of 2020/21. The ceiling of the relaxation is subject to HK$5,000 for each of the first two quarters while another HK$1,500 waiving per quarter for the rest of the year for each rateable non-domestic property.

Removal of Business Registration Expense

Business registration fees for 2020/21 and the registration fees for annual returns for two years are also waived. It can significantly lower the financial burden of growing enterprises.

Salary Related Waiving

Followed by the reduction in profit tax, the salaries tax and tax under personal assessment the upcoming 2019/20 will be waived, also subject to a ceiling of HK$20,000.

Supportive Funding

The government will further provide low-interest loans with a 100% guarantee for potential enterprises in a maximum total of HK$2 million. Up to a 3 years repayment period, debtors can postpone their principal repayment of the loan for the first six months.

STEM Internship Offer

With an HK$40 million subsidy concerning STEM graduates’ internship offers, the program can potentially provide future STEM development direction for the participant.

Benefit for Specific Industries

Technology development, tourism as well as vehicle-related innovation industry are the major sectors with special funding from the government.

100% Government Guarantee Loan

A concessionary low-interest loan with 100% guarantee for enterprises, with a maximum loan amount of HK$2 million is introduced. The repayment period is up to 3 years while there is a moratorium on principal repayment for the first six months.
For further detail, you may refer to our latest blog about the SME scheme.

Credit to PWC 2020/21 Budget Highlight

Coworking Space and Start-ups

The city is experiencing a tough time for both employees and companies at the moment. The above-proposed measures can possibly relieve the company’s burden, especially for start-ups in the upcoming fiscal year. Staying optimistic and positive during this period is the right attitude for a start-up. In fact, they are taking advantage of this downtime.

Compared with large existing corporates, SMEs and start-ups have the flexibility to manipulate the current operation. Start-ups can possibly minimize the potential loss or even searching for a more valuable option. At this moment, coworking space is a great choice for start-ups to keep their pace in this hard time.

Affordable rental service with free administrative support from professionals, start-ups and coworking space is always a great matchup. If you are struggling to cut costs to maintain your competitiveness, switching to a coworking space is your right choice.