SMEs welcome help but could do with more
There were surprises and disappointments in the budget for entrepreneur Ting Wing-fai. He thinks the financial secretary should have offered more support to small and medium-sized enterprises to face the challenging economic situation ahead.
The managing director of Wilson Trading, a wholesaler of health products and medicines with about a dozen staff in Hong Kong, he will benefit from the one-off profits tax cut and waivers on rates and business registration fees, which will mean at least HK$24,000 in savings.
'I was surprised that the government cut the profits tax by 75 per cent, with a ceiling of HK$12,000. It helps us a little bit, but this is not enough,' Ting said.
'Ideally we hope the government would exempt small businesses, with a net profit of HK$500,000 or less, from paying tax in the coming year,' he said. Many companies are facing the double challenges of a rising yuan and inflation.
The firm, which trades with local retailers and mainland suppliers, will be entitled to the HK$12,000 tax reduction, equal to about 12 per cent of its tax bill since it is paying less than HK$100,000 in profits tax this year.
'The proposals are better than those in the previous budget, but the government could have done more to encourage people to start up their businesses and help SMEs to combat the uncertain global economic crisis,' he said.
Financial Secretary John Tsang Chun-wah highlighted a series of measures in his budget to support enterprises, and said he was 'deeply concerned about the possible hardship small and medium-sized enterprises may suffer in times of economic downturn'.
Apart from proposing the one-off profits tax reduction and exemption of business registration fees for one year, Tsang announced the enhancement of the existing SME Financing Guarantee Scheme, which now covers up to 70 per cent of loans to eligible firms. He said the scheme would be extended to cover 80 per cent, for which the government would commit HK$100 billion.
Fees for users of the scheme will also be lowered.
At present, fees are from 32 to 35 per cent for a 70 per cent loan, but in future an 80 per cent loan will require the payment of a fee of only 10 to 12 per cent.
Other steps to help for small businesses include halving the charges for import and export declarations and abolishing capital duty.