In Hong Kong, the coronavirus (COVID-19) epidemic, together with measures to reduce people flows and increase social distance, has affected many businesses, including the tourism, catering, transport and retail sectors, the arts and culture sector, agriculture and fisheries, conventions and exhibitions business, property management companies, hawkers, registered tutorial schools; as well as amusement game centres, cinemas, fitness centres, beauty parlours, etc which have closed due to Government measures to safeguard public health. The Government has introduced stimulus packages to support businesses and individuals affected by the pandemic.

Details of various measures are as follows:-

Tax measures

• Reduction of profits tax, salaries tax and tax under personal assessment by 100% in the year of assessment 2019/20 subject to a ceiling of HK$20,000.
• Waiver of the surcharge for up to one year on tax payments deferred under an approved instalment plan.
• Automatic three month extension of deadline for payment of salaries tax, tax under personal assessment and profits tax for the year of assessment 2018/19 falling due in April to June.
• Extending to 1 June 2020 the date for filing country-by-country reporting notification for entities with accounting periods ended between 31 December 2019 and 29 February 2020.
• Waiver of rates in 2020-21, subject to respective ceilings for domestic and non- domestic properties.
• Waiver of business registration fees in 2020-21.
• Waiver of annual return registration fees for two years.

Social security measures

• Disbursements of HK$10,000 to each Hong Kong permanent resident aged 18 or above.
• Relaxation of asset limits for able-bodied applicants of the Comprehensive Social Security Assistance Scheme (a household-based scheme) by 100% for six months, helping recipients meet their basic needs.
• 20% fare concession for Mass Transit Railway for six months.
• Relaxation of threshold of the Public Transport Fare Subsidy Scheme from $400 to $200 for six months.
• Interest-free deferral of loan repayment for two years to students receiving loans from the Working Family and Student Financial Assistance Agency.
• Additional $1,000 for each student receiving $2,500 under the Student Grant for the 2019/20 school year.
• Extra one month payment of CSSA standard rate, Old Age Allowance, Old Age Living Allowance or Disability Allowance.
• Waiver of one month’s rent for lower income tenants living in public rental units.
• One-off special allowance for eligible Working Family Allowance households (equivalent to 2 months’ allowance) and Student Financial Assistance households (HK$4,640).

Supportive measures for employers, employees and self-employed persons

• Creation of 30,000 jobs in the public and private sectors
• Monthly wage subsidy (monthly cap of HK$9,000 per employee) for six months for employers who undertake not to implement redundancy of staff.
• Monthly subsidy of $5,000 for each travel agents’ staff member, active freelance tourist guide and tour escort for six months
• Monthly subsidy of $6,000 for each eligible active taxi and red minibus driver for six months.
• Monthly allowance of $1,000 for each cleansing worker, toilet attendant, security staff engaged by service contractors of the Government and Hong Kong Housing Authority for no less than four months.
• One-off subsidy of $7,500 for each eligible self-employed person.
• One-off subsidy of $10,000 for each tour coach driver.
• One-off subsidy of $7,500 for each eligible construction worker.
• One-off subsidy of $30,000 per vehicle for each registered owner of a taxi, red minibus, non-franchised bus, school private light bus, hire car, and for each licence holder of green minibus service.
• One-off grant of $7,500 for each registered coach under National Sports Associations and Sports Organisations who has proven coaching record in the past year and for each instructor, coach, trainer and provider of interests classes for schools or organisations subvented by the Social Welfare Department.
• Subsidies for arts organisations and freelance arts workers to pay the salaries of their staff, contractors and freelance workers as much as possible.

Business support

• Introduction of concessionary low-interest loan with 100% Government guarantee for enterprises, with maximum loan amount of HK$2 million and repayment period of up to three years, and moratorium on principal repayment for the first six months.
• Subsidy of HK$250,000 to HK$2.2 million for each licensed catering outlet.
• One-off subsidy ranging from HK$300,000 to $400,000 for each licensed hotel.
• One-off subsidy ranging from HK$20,000 to HK$200,000 for each eligible travel agent.
• One-off subsidy of HK$200,000 (small aircraft) or HK$1 million (large aircraft) for each eligible air operator.
• One off subsidy of HK$80,000 or HK$200,000 for each eligible food license holder.
• One off subsidy of HK$80,000 for each eligible retail store.
• One-off subsidy of up to $3 million for aviation support services and cargo facility operators.
• One-off grant of $80,000 for each eligible catering outlet in schools.
• 100% reimbursement of the actual regular repair and maintenance costs and insurance premium for 6 months for the franchised bus companies, franchised/ licensed ferry operators and the Tramways Limited.
• 75% rental concession for eligible tenants of government premises and eligible holders in respect of tenancies on government land for six months.
• 75% electricity charges subsidy (monthly cap of HK$5,000) for non-residential accounts for eight months.
• Waiver of 75% water and sewage charges for non-domestic accounts for 12 months.
• Increase in waiver amount of rental fees of venues under the Leisure and Cultural Services Department from 50% to 75% for 6 months.
• Interest-free deferral of loan repayment for 2 years to self-financing post-secondary institutions and non-profit-making international schools which have taken loans from the Government.
• Other measures to encourage staff to learn new skills and help enterprises to apply technology.

Accounting implications

Preparers of financial statements and auditors should consider the implications of the COVID-19 pandemic:

• the availability of working capital and accuracy of cash flow forecasts, and consequently on the appropriateness of the going concern assumption,
• the possibility of impairment of non-financial assets,
• the availability of observable market transaction or information, and consequently on the difficulty in fair value measurement,
• the possibility of fraudulent sale transactions and on the amount and timing of revenue recognition, and
• customers’ liquidity, and consequently on measurement of expected credit loss of trade receivables.