On April 8th 2020, The Hong Kong Government announced a second economic relief package and was approved on 18th of April. The amount pledged by the HKSAR is HK$137.5 billion aimed at helping individuals and enterprises affected by the Covid-19 Outbreak.
In response to the economic impact, the Hong Kong government has announced a new plan for a series of financial reliefs to help businesses through this difficult period. This article will break down the announcement and highlight the key areas that might be beneficial for you and your business.
What was announced?
In addition to the $30 billion Anti-epidemic Fund approved by Legislative Counsel on 21 February, the Hong Kong government has further announced a $137.5 billion relief package as a response to help businesses to stay afloat, retain workers in employment, relieve financial burdens of individual and business, as well as to facilitate the economy to recover once the epidemic is contained.
- The government launch a HK$80 billion employment subsidy scheme, capped at $9,000 per month (i.e. 50% of monthly median wage of HK$18,000) per employee for six months.
- The government and private sectors create 30,000 time-limited jobs at a cost of $6 billion; civil service will recruit 10,000 people in 2020-21.
- On sector specific relief, HK$21 billion pledged for 16 support measures.
The package covers four major areas:
- Job retention, job creation, job advancement;
- Sector-specific relief;
- Government rental concessions, fee waivers, deferral of loans;
- Government facilitation in other areas.
Employment Support Scheme
On 12th of May, Hong Kong Chief Executive announced the first tranche of the Employment Support Scheme (ESS) will receive online application from May 25.
The first tranche of the ESS will provide wage subsidies for three months from June to August 2020. The application will commence on May 25 and last for three weeks (until June 14).
- All employers who have been making Mandatory Provident Fund (MPF) contributions or have set up Occupational Retirement Schemes for their employees will be eligible for ESS, except those on the exclusion list. The MPF accounts of the relevant employers and employees applying for the wage subsidy should have been MPF account opened on or before March 31, 2020 and the contributions processed on or before May 7 shall prevail.
- The ESS will also cover self-employed persons (SEPs). SEPs who have set up an MPF account on or before March 31, 2020 and with that account remaining opened as of the same date may apply for a one-off subsidy of $7,500.
- The amount of subsidy for an employer would be calculated on the basis of 50% of the actual wages paid to employees at a specified month from December 2019, January 2020, February 2020 and March 2020, with a wage cap at $18,000 per month (i.e. maximum subsidy is $9,000 per month per employee) for six months. March is set as the reference month, and the number of employees in that month will be used to compare the number of employees in June, July, and August.
- Payment will be made in two tranches. Applications for the first tranche will start on 25th of May 2020 and last for three weeks. Application dates and details for the second tranche will be announced in due course.
Benefiting our citizens
- $10,000 cash payout to each Hong Kong permanent resident aged 18 or above.
- MTRCL to provide a 20% fare concession for 6 months from 1 July.
- To temporarily relax the threshold of the Public Transport Fare Subsidy Scheme from $400 to $200, from July to December.
- Grant interest-free deferral of loan repayment for 2 years to students receiving loans from the Working Family and Student Financial Assistance Agency.
- Provide an additional $1,000 for each student receiving $2,500 under the Student Grant for the 2019/20 school year.
Relieving tax burden
- Reduce salaries tax and tax under personal assessment for YA 2019-20 by 100%, subject to a ceiling of $20,000.
- Deadline for payment of salaries tax, tax under personal assessment and profits tax for YA 2018-19 that due in April to June this year automatically extended for 3 months.
- Waive rates of domestic properties for four quarters of 2020-21, subject to a ceiling of $1,500 per quarter.