The Financial Secretary of Hong Kong has proposed several measures in the newly released Budget to accelerate the promotion of the construction of Hong Kong as a “regional intellectual property trading center”. In addition, the “Patent Box” tax concession will reduce the tax rate on qualifying profits derived from patents from the current 16.5% to 5%. The relevant Bill will be introduced to the Legislative Council on April 10 for First Reading.
The following are the critical measures of the 2024-25 Budget aimed at accelerating the promotion of Hong Kong as a “regional intellectual property trading center”: 1. To support researchers in commercializing more technologies at different stages, the Budget proposes to set up a Technology and Innovation Support Centre of the World Intellectual Property Organization (WIPO) in Hong Kong. When in operation, it is expected that the Centre will provide quality patent-related information and services to local enterprises and entrepreneurs, assist them in creating, protecting, managing, and commercializing their intellectual property rights, and promote intellectual property trade. 2. To introduce a “Patent Box” tax concession to reduce the tax rate on qualifying profits derived from patents from the current 16.5% to 5%, to encourage the industries to proactively conduct more research and development (R&D) activities and create more intellectual property rights with market potential, thereby accelerating the promotion of innovation and technology and trade in intellectual property. The relevant Bill will be introduced to the Legislative Council for First Reading on April 10, and the legislative work will be completed. 3. Strengthening intellectual property protection and trade is conducive to developing Hong Kong’s cultural and creative industries and building a “center of cultural and artistic exchanges between China and the rest of the world”, and licensing business is one of the directions worth developing. According to an industry survey, global retail sales of licensed goods and services will exceed US$340 billion in 2022, an increase of more than 8% over the previous year. Coupled with the prevalence of streaming platforms and e-commerce in recent years, characters, brands, and popular gadgets can be rapidly disseminated globally through the Internet, and there is enormous room for market growth. Hong Kong is also a significant licensing hub in Asia, and many international licensors and licensing agents have chosen to use Hong Kong as a strategic base to expand their licensing business in Asia. In 2022, the total value of export and import of services related to the use of intellectual property rights in Hong Kong will reach HK$5.8 billion and HK$16.3 billion, respectively, representing a growth of 3% and 9%, respectively, over 2017. 4. Through the CreateSmart Initiative (CSI), which promotes the creation and trading of intellectual property rights related to creativity, the Hong Kong Trade Development Council (TDC) is also working on optimizing the Asian Intellectual Property Rights Trading Platform (AIPRT) by including content related to creative property rights, to facilitate the trading of creative copyrights and promote the industrialization of artistic and literary creativity, to launch it on a trial basis within this year. At the same time, it will study the improvement of the Copyright Ordinance to provide appropriate copyright protection in light of the latest developments in artificial intelligence. 5. On Mainland cooperation, the Hong Kong Government will continue to work closely with the CNIPA on several fronts, including enhancing the training of patent examiners. The Hong Kong Government will also promote exchanges and cooperation with the cities in the Greater Bay Area (especially Qianhai, Shenzhen) in various IP areas, including facilitating cross-border applications for vario us IP registrations for protection and promoting Hong Kong’s IP professional services to support enterprises in the region to trade in IP rights.