Singapore's 2021/22 Budget theme is "United Together, Stronger with Every Challenge", aiming to support the transition of the Singapore economy from lockdown to restructuring. These measures aim to provide targeted relief for families and businesses affected by the coronavirus pandemic, and accelerate structural adjustments for the future. One decision that comes as no surprise is the postponement of the Goods and Services Tax (GST) increase from 7% to 9% this year. The adjustment of the GST rate may be timed to coincide with the implementation of the import relief measures for low-value goods, effective 1 January 2023. This concession stipulates that Singapore consumers importing goods valued below S$400 via air freight or mail are exempt from GST. This change will require affected offshore companies, online marketplaces, and parcel delivery services popular among Singapore consumers to register for GST in Singapore and collect GST on low-value goods imported into Singapore.
Hong Kong maintains resilience through its substantial fiscal reserves and has the capacity to withstand headwinds from both domestic and external economies. The government maintains its business-friendly tax regime, confirming that the two-tiered profits tax rates for companies (8.25%/16.5%) remain unchanged, and will review tax arrangements related to family office businesses. Prior to this, Hong Kong has already begun developing itself as a hub for Asian family offices and private equity centers. The open-ended fund company (OFC) regime has undergone several updates to encourage offshore funds to return to Hong Kong, this Asian financial center. Although tax incentives are fewer than in previous years, there are still some tax incentives in the budget:
- 100% rebate on salaries tax and personal income tax for the 2020-21 year of assessment, capped at HK$10,000
- 100% rebate on profits tax for the 2020-21 year of assessment, capped at HK$10,000
- Exemption from business registration fees for the 2021-22 year
Looking back, Singapore and Hong Kong remain highly attractive locations.
