Hong Kong business support guidance

The Hong Kong (SAR) government (the “government”) has announced a number of measures during the crisis. These include:

• a HK $167.5 billion support package for industries and the Hong Kong public called the Anti-epidemic Fund
• a low-interest loan guarantee program for SMEs up to HK$50 billion
• deferring loan principal payments by corporate borrowers on a pre-approved basis under the Pre-approved Principal Payment Holiday Scheme
• deferring mortgage loan principal payments by flat owners under the Housing Authority Subsidised Sale Flats Scheme by a maximum period of 12 months through a mortgage principal moratorium plan
• waiving business registration and annual return fees for 2020-21
• reducing profits and salaries tax by up to 100% (subject to a ceiling of HK$20,000)
• waiving rates for non-domestic business for four quarters of 2020-21 subject to a ceiling of HK$5,000 per quarter for the first two quarters and HK$1,500 for the remaining two quarters
• other waivers of electricity, water and sewage charges and government rental rates totalling HK$18.3 billion
• a cash handout of HK$10,000 to all permanent residents aged over 18
• rent for eligible businesses/organisations operating in Government premises from April to September 2020 has been reduced by 75%, and businesses which have completely ceased operation (e.g. cross-border ferry piers) will receive a full rental waiver

Further details on some of these schemes are provided below.

Anti-epidemic Fund (the "Fund")

The Fund aims to provide additional resources to strengthen the territorial-wide anti-epidemic work and will render support to the affected industries and employees, The Government announced the setting up of the HK$30 billion Fund on 14 February 2020. The first round of support measures largely focused on providing one-off cash injections to individuals in affected sectors.

As the epidemic continued and became more severe, the Government announced on 8 April 2020 that a second round of HK$137.5 billion worth of relief measures under the Fund would be launched by the Government to provide further assistance to affected businesses and employees. The second round of relief measures focuses on job retention, job creation and job advancement projects, as well as enhancing the coverage of existing relief measures. The second round measures are specifically targeted at businesses most affected, and a summary of the more relevant and material measures are included below. Further information on other measures, and more detail on the summarised measures, can be provided on request.

The first round of relief measures

More than half of the funding – i.e. HK$16.9 billion – will be used to provide one-off cash injections to retailers, food and drink service providers, transport companies, students, arts and cultural sector, guest houses and travel agents. The Fund includes the following support:

Travel Agents:

• Under the scheme, each eligible travel agent may receive a one-off subsidy of HK$80,000. Application must be made to the Commerce & Economic Development Bureau.

Retailers:

• A sum of HK$5.6 billion has been reserved under the fund for the scheme which is expected to benefit some 70,000 retailers. Each eligible retail store will receive a one-off subsidy of HK$80,000. The first tranche of payments will be made within April. The maximum subsidy amount for a parent company that operates retail groups or chain stores under the same business registration is HK$3 million, equivalent to no more than 38 stores. As social enterprise retail outlets may not have a business registration, the Hong Kong Council of Social Service will help provide certification for them to confirm their eligibility and collect applications from them directly.
• The Fund’s Retail Sector Subsidy Scheme is open for applications as of 23 March 2020, and the application period would end on 12 April 2020.

Transport trades:

• A sum of HK$1.4 billion has been reserved under the Fund to provide a one-off subsidy non-accountable subsidy to registered owners of some 130,000 commercial vehicles. Specifically, a one-off subsidy of HK$20,000 will be provided to each licensed non-franchised public bus; and a one-off subsidy of HK$10,000 will be provided to each licensed school private light bus, hire car and goods vehicle. Eligible registered owners are required to send the completed registration form with a copy of the required document to the Transport Department by post on or before May 31, 2020.

Food sector:

• Under the Food Licence Holders Subsidy Scheme, successful applications will receive a one-off subsidy of HK $80,000 or HK $200,000, depending on the type of food licence.
• Under the Licensed Hawkers Subsidy Scheme, a subsidy of HK$5,000 will be offered to each eligible licensee holding a valid hawker licence that remains valid when the application is approved.

Construction workers:

• The Government will implement targeted measures to support the construction industry in combating the effects of COVID-19. These measures include:
  • a subsidy of HK$50,000 each to about 7,000 eligible contractors, subcontractors and consultants;
  • a subsidy of HK$1,500 each to about 240,000 in-service construction workers, who need to work in a labour-intensive environment on construction sites, to help cover the extra expenses for procuring anti-epidemic equipment;
  • a subsidy of HK$1,000 each to construction workers with valid registration under a specified period under the Construction Workers Registration Ordinance, who are engaged in small-scale works outside construction sites, such as those involved in renovation, repair and maintenance; and
  • a subsidy of HK$20,000 each to small and medium-sized enterprise (SME) consultants, which are company members of professional institutions and associations.

Cleaning workers:

• The Fund includes a HK$1,000 allowance for frontline cleaning workers, toilet attendants and security workers employed by government and Housing Authority service contractors to support anti-epidemic efforts. The government said its target is to effect payments for the first round of the monthly allowance to the contractors by the end of this month.

Property management companies and owners’ organizations:

• Eligible property management companies and owners’ organisations will be given a lump sum funding of HK$2,000 per building block for four months, as a subsidy for stepping up cleaning efforts (i.e. buying of cleaning products and protective kits, etc.) and as recognitions of their efforts in enhancing hygiene awareness.

The second round of relief measures

Aside from the measures aimed at job retention, job creation and job advancement, which are summarised under the employment section below, the Government will also provide one-off relief grants to various hard-hit sectors, which include the following:

Exchange participants and Securities and Futures Commission (SFC) licensed individuals:

The following exchange participants and SFC licensed individuals will each be given a subsidy in the amount specified below:

• a subsidy of HK$50,000 to some 790 Category B and Category C exchange participants (i.e. brokers ranked 15th onwards by market turnover).
• a subsidy of HK$2,000 to each SFC licensed individual.

Creative industries:

The Government will implement targeted measures to support individuals and businesses in the creative industry to combat the effects of COVID-19. These measures include:

• a subsidy of HK$100,000 per screen to each cinema. The maximum subsidy for a cinema circuit is HK$3 million.
• a subsidy of HK$25 million to PMQ for upkeeping PMQ’s operation and waiver of its tenants’ rental.
• meeting all the participation fees of eligible participants in the next Hong Kong Book Fair. The maximum amount of subsidy for each participant is HK$100,000.

Tourism industry

The Government will implement targeted measures to support individuals and businesses in the tourism industry to combat the effects of COVID-19. These measures include:

• a one-off subsidy ranging from HK$20,000 to HK$200,000 to each licensed travel agent.
• a monthly subsidy of HK$5,000 for six month to each travel agents’ staff and active freelance tourist guides and tour escorts holding a valid pass.
• a one-off subsidy of HK$300,000/$400,000 to each licensed hotel.
• a one-off subsidy to cruise lines by offering refund of berth deposits for cancelled ship calls during the suspension of immigration service when they schedule a prospective ship call.

Aviation sector

The Government will implement targeted measures to support individuals and businesses in the aviation sector which has been significantly affected by the complete shutdown of international traffic due to the COVID-19 outbreak. These measures include:

• a one-off subsidy of HK$1 million for each large aircraft registered in Hong Kong and HK$200,000 for each small aircraft registered in Hong Kong.
• a one-off subsidy of up to HK$3 million to each aviation support services and cargo facilities operator with 100 employees or above, and HK$1 million to each aviation support services and cargo facilities operator with less than 100 employees to each operator.

Catering sector

The Government will implement targeted measures to support individuals and businesses in the catering sector which have been significantly affected by the effects of COVID-19. These measures include:

• a one-off subsidy ranging from HK$250,000 to HK$2.2 million to eligible catering outlets (e.g. general restaurants, light refreshment restaurants, marine restaurants and factory canteens) based on the size of their premises. The subsidy will be disbursed in two tranches, and not less than 80% of the subsidy must be used to pay employees’ salaries. A licencee is required to undertake that there would be no redundancy of staff for 3 months after obtaining the subsidy, and it will not apply for subsidy under the Employment Support Scheme (see below).
• a further one-off subsidy of HK$50,000 for each eligible catering outlet directed by the Government to close whole of its licensed premises (including karaoke establishments, bars/pubs and nightclubs).

Sectors which are completely or partly closed due to the measures for safeguarding public health imposed by the Government

The Government will implement targeted measures to support businesses which have been ordered by the Government to close or put in place specified pre-cautionary measures pursuant to the Prevention and Control of Disease (Requirements and Directions) (Business and Premises) Regulation (Cap. 599F).

Financing / Debt

Low-interest loan for SMEs

The government has launched a concessionary low-interest loan guarantee program for local businesses amounting to a potential HK$50 billion of support.

The terms of the scheme are:

Eligibility

• Applicable to Hong Kong enterprises of all sectors, including those most affected by the COVID-19 infections such as retail outlets, travel agents, restaurants, cinemas, karaoke establishments and transport operators and loan applicants should have been operating and holding a valid Business Registration Certificate for at least three months by end December 2019.
• Loan applicants need to provide proof that they have suffered at least a 30 per cent decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019.

Loan Ceiling and Maximum Loan Guarantee Period

• The maximum amount of loan per enterprise is up to the total amount of employee wages and rents for six months per enterprise or HK$4 million, whichever is the lower (If an enterprise does not have employee(s) and rented office(s), proxy is made to 50 per cent of the highest monthly net income in 2019 multiplied by six).
• The maximum repayment period is three years from the first drawdown of the facility. To lessen the immediate repayment burden of enterprises, an option for a moratorium on the principal will be provided under which loan applicants will only be required to pay interest in the first six months.

Interest Rate and Guarantee Fee

• An interest rate of the Hong Kong Prime Rate minus 2.5 per cent per annum (or equivalent) will be applied. The guarantee fee will be waived.

Enhancement of existing SME Financing Guarantee Schemes

The Government has set aside an estimated total commitment of HK$183 billion in relation to Government guarantees on loans to SMEs through enhancements to the existing 80% Guarantee Product, 90% Guarantee Product and 100% Guarantee Product.

80% Guarantee Product

• Since its launch on 31 May 2012, the 80% Guarantee Product aims to provide support for SMEs in obtaining financing in the commercial lending market by providing 80% guarantee coverage to credit facilities of eligible enterprises approved by participating lenders at concessionary guarantee fee rates.
• As part of the second round of relief measures under the Fund, the Government has raised the maximum loan amount per enterprise from HK$15 million to HK$18 million, and will provide concessionary interest at a rate up to 3% for one year for loans under the 80% Guarantee Product.

90% Guarantee Product

• Since its launch on 16 December 2019, the 90% Guarantee Product aims to provide additional support to smaller-sized enterprises, businesses with relatively less operating experience, as well as professionals seeking to set up their own practices, to obtain financing.
• As part of the second round of relief measures under the Fund, the Government has raised the maximum loan amount per enterprise from HK$6 million to HK$8 million, and will provide concessionary interest at a rate up to 3% for one year for loans under the 90% Guarantee Product.

Special 100% Guarantee Product

• As part of the 20-21 budget, the Government introduced a 100% Guarantee Product for SMEs. As part of the second round relief measures, the maximum loan amount per enterprise has increased from HK$2 million to HK$4 million.

Enhancement of the Dedicated Fund on Branding, Upgrading & Domestic Sales (“BUD Fund”) and the SME Export Marketing Fund (“EMF”)

The BUD Fund and EMF will be enhanced to strengthen support for enterprises facing difficulties amid the COVID-19 outbreak. With respect to the BUD Fund, the cumulative funding ceilings of HK$2 million for each enterprise to undertake projects in the Mainland or projects in the economies with which Hong Kong has signed Free Trade Agreements will be removed so that enterprises can make use of the total funding of up to HK$4 million to expand to new markets.

Pre-approved Principal Payment Holiday Scheme (“PPPHS”)

The PPPHS was jointly launched by the Hong Kong Monetary Authority and the Banking Sector SME Lending Coordination Mechanism to alleviate the cashflow pressure faced by corporate borrowers affected by the COVID-19 outbreak. All authorised institutions are expected to participate in the PPPHS. Corporate customers that have an annual sales turnover of HK$800 million or less, have no outstanding loan payments overdue for more than 30 days, and are not in the process of ceasing operations or declaring bankruptcy or liquidation are eligible for the PPPHS.

Under the PPPHS, all participating institutions will offer principal payment holiday to eligible corporate borrowers on a pre-approval basis. Eligible corporate borrowers’ loan principal payments, including revolving facilities, that are due within a six month period between 1 May 2020 and 31 October 2020 will be pre-approved for deferment for six months, whereas trade facilities will be deferred by three months. It should be noted that the participating institution may require loans of facilities which are self-liquidating in nature to be settled when the underlying payment has been received by the covered borrower.

The PPPHS does not cover syndicated loans or loans used for financing purchases of shares or other financial assets.

Mortgage Principal Moratorium Plan under the Housing Authority Subsidised Sale Flats Scheme (“SSFS”)

The Hong Kong Housing Authority has issued official guidance to banks and financial institutions participating in the provision of mortgage loans under the SSFS (the “Participating Financial Institutions”) confirming that the Participating Financial Institutions may offer a mortgage principal moratorium plan to flat owners under the SSFS. Under the mortgage principal mortarium plan, the repayment of the principal may be deferred for a maximum period of 12 months, and the repayment period of the mortgage loan may be extended correspondingly by a maximum of 12 months.

The principal moratorium period is expected to commence by 31 December 2020 at the latest.

To further encourage Participating Financial Institutions to implement the newly introduced mortgage principal moratorium plan, and therefore reduce the burden of mortgage repayment by owners of SSFS flats in light of the economic downturn caused by the COVID-19 outbreak, the Hong Kong
Housing Authority will provide mortgage default guarantees for the Participating Financial Institutions. This means that the Housing Authority will undertake to meet the shortfall in repayment in the event of default by the mortgagors under specified circumstances during the mortgage default guarantee period.

Taxation

The Government has implemented various tax concessionary measures to alleviate the financial burden experienced by individuals and businesses due to the COVID-19 outbreak. These measures include:

Reduced Profits and Salaries Tax

• Profits and salaries tax have been reduced by up to 100%, subject to a ceiling of HK$20,000.

Extension of Tax Deadlines

• Tax payment deadlines for salaries tax, personal assessment and profits tax demand notes for the year of assessment 2018/19 which fall between April to June of 2020 will be automatically extended by three months.
• If taxpayers for salaries tax, personal assessment and profits tax have already settled the first payment in accordance with the demand note for the year of assessment 2018/19, then the deadline for the second payment is automatically extended for three months from the date specified on the demand note.

Employment

As part of the second round of relief measures under the Fund, the Government will implement employment-related measures to encourage job retention, job creation and job advancement in view of the financial difficulties and increased reliance on technology experienced by businesses and employees from the COVID-19 outbreak.

Employment Support Scheme (ESS)

The Government will provide wage subsidies to eligible employers under the HK$80 billion ESS to retain their employees. All employers who have been making mandatory provident fund contributions for their employees (subject to very limited exceptions) are eligible to participate in the ESS.

Under the ESS, the Government will provide a wage subsidy to eligible employers for a period of six months. The amount of the subsidy will be calculated based on 50% of the monthly salary of the relevant employees, subject to a salary cap of HK$18,000. This means that the maximum amount of the wage subsidy is HK$9,000 per employee per month, or HKD54,000 per employee during the six-month period. Payments will be made to employers in two tranches, and the first payment will be made not later than June 2020.

Self-employed people who have made mandatory provident fund contributions from 1 January 2019 to 31 March will be granted a one-off subsidy of HK$7,500.

Employers who would like to receive the wage subsidy will need to make an application under the ESS and undertake that they will not implement any redundancies. The Government has indicated that the subsidy must be applied to pay wages, and it will put in place a very robust audit mechanism to ensure that employers do not use the subsidy for other purposes. A list of the employers which have been granted the subsidy will be publicised, so that employees will know whether their employer is prevented from making redundancies.

Job creation

The Government will invest HK$6 billon to create 30,000 time-limited jobs (up to 12 months) in the public and private sectors in the coming two years for people of different skill sets and academic qualifications, benefitting professionals and technicians, fresh graduates, middle level and grassroots workers.

In the second half of 2020, the Labour Department will raise the ceiling of the on-the-job training allowance payable to employers under the Employment Programme for the Elderly & Middle-aged, the Youth Employment & Training Programme and the Work Orientation & Placement Scheme to further encourage employers to hire seniors, youngsters and the disabled.

Job advancement

The Government has set aside HK$800 million to implement six measures to encourage staff in the private sector to learn new skills and help enterprises apply technology, in view of the increased reliance by businesses on technology and remote working as a result of social distancing. These measures include:

• establishing a LAWTECH Fund of approximately HK$40 million to assist SME law firms or barristers’ chambers to procure or upgrade their information technology system and arrange relevant LAWTECH training for their staff to support the development of remote hearings. setting aside approximately HK$70 million to provide Online Dispute Resolution services to the general public and businesses in relation to COVID-19 disputes with a claim amount of HK$500,000 or less.
• setting aside approximately HK$60 million to provide subsidies to the public and private sectors for 50% of project costs for projects deploying 5G technology, subject to a cap of HK$500,000 for each project.
• applying HK$500 million to implement the Distance Business Programme under the Innovation and Technology Bureau to support enterprises to continue business with technology adoption and provide related technology training to staff. setting aside approximately HK$30 million to provide training subsidies to some 600 consulting firms through the Construction Industry Council. A subsidy of HK$50,000 will be given to each company.
• applying HK$100 million to provide matching grants for training programmes for staff in the public and private sectors.

Key Regulatory Statements

In response to the outbreak of COVID-19 and associated instability in the financial markets, a number of regulatory initiatives have been introduced in Hong Kong and Singapore to alleviate the impact and provide more time for firms to comply with specific requirements. Find out more here.