• Insights

New Hong Kong budget: highlights for employment

Hong Kong
16.05.24
5
Written by
Lewis Silkin, a specialist employment law practice in Hong Kong.
The 2024-25 Hong Kong Budget unveils a series of strategic policies and initiatives centred around revitalising the Hong Kong economy.

The policies include those aimed at bringing in capital, enterprises and talent. In this article, we highlight some of the key initiatives which may be of interest to employers and employees. 

Salaries Tax

The Budget proposes a 100% reduction in the salaries tax payable for 2023-24, subject to a ceiling of HKD 3,000 (approximately EUR 356). It is estimated that over two million taxpayers will benefit from this measure.  
 
The Budget also proposes a two-tiered standard salaries tax rate regime to reduce the city’s deficit by increasing tax on high income earners. Starting from the year of assessment 2024-25, the first HKD 5 million of net income will continue to be subject to the standard rate of 15%, while the portion of net income exceeding HKD 5 million will be subject to a standard rate of 16%. This measure will only affect around 12,000 taxpayers but is expected to bring in additional revenues of around HKD 910 million per year. 
 

Enterprises, Capital and Talent 

More than 40 strategic enterprises have set up or expanded their businesses in Hong Kong, and are expected to bring in over HKD 40 billion in total investment and create around 13,000 jobs.  
 
Further, the Government intends to set aside HKD 6 billion for the development of innovation and technology, including plans to set up the AI Supercomputing Centre, the Hong Kong Microelectronics Research and Development Institute, and the Greater Bay Area International Clinical Trial Institute. The opportunities and demand for skilled technology professionals in Hong Kong are likely to increase following the announcement.   
 
Attracting new talent continues to be an important focus for Hong Kong. Over 140,000 applications under various talent schemes were approved in the last financial year, including under the Top Talent Pass Scheme, which shows that Hong Kong continues to be an attractive destination for foreign talent. The Labour and Welfare Bureau intends to explore enhancing the effectiveness of these schemes in its upcoming mid-year review as well as host a Global Talent Summit to draw more foreign talent into Hong Kong. 
 

Local Talent

In addition to proactively attracting foreign talent, the Government will continue its efforts in nurturing local talent through a number of sector-specific talent training programmes for individuals who work in the healthcare, maritime, aviation, patent services, and legal sectors. The Government plans to allocate HKD 680 million to support vocational and professional education. Initiatives include expanding the Pilot Incentive Scheme to Employers in order to encourage employers to provide more workplace learning opportunities for their employees. 

Through these initiatives, it is envisaged that employers will have access to a wider pool of talent. 

Social Welfare

The Budget aims to enhance social welfare through several initiatives aimed at supporting persons with disabilities, women, and working families.  
 
A pilot subsidy scheme for employed persons with disabilities is set to be introduced which will provide an additional subsidy of HKD 500 per month for disabled recipients of the Comprehensive Social Security Assistance Scheme as an incentive to enter and/or remain in the workforce. The Government will also continue to fund projects that empower women in the workforce. Measures to support working families include the establishment of more child-care centres and the expansion of the After School Care Programme. 

Takeaway for employers

The 2024-2025 Budget contains a number of programmes and incentives that will be beneficial to employers, particularly with respect to attracting new talent and subsidising the training of existing employees. Employers would do well to seek out and take advantage of these opportunities.  

Discover more about compensation and benefits on our Global HR Law

Authors
Catherine Leung
Partner - Hong Kong
Lewis Silkin (Hong Kong)
Gladys Ching
Senior Associate - Hong Kong
Lewis Silkin (Hong Kong)