Technology Voucher” Eliminates Cumulative Funding Limit

Cancellation of Cumulative Funding Limit for Technology Voucher

The Innovation and Technology Bureau has relaxed restrictions related to relevant institutions under the Technology Voucher program since August 14, 2020. Relevant institutions (i.e., enterprises/organizations established under different legal entities but with 30% or more ownership held separately by the same individuals) will no longer be considered as the same institution for the calculation of cumulative funding under the Technology Voucher. Under the new measures, enterprises with individual shareholders holding 30% or more ownership will have to calculate the funding amount collectively, and the maximum cumulative funding limit of HKD 600,000 is immediately canceled.

In simple terms, under the new measures, the Technology Voucher program can provide HKD 600,000 in funding for each eligible enterprise. We have promptly shared this good news with our Technology Voucher funding program clients and have received inquiries from many business owners looking to apply for Technology Vouchers for their other companies. In fact, technology solutions, from corporate management to digital marketing and automation processes, have become essential in systematic management, especially in the digital business era, and are one of the competitive factors for businesses. With Technology Voucher funding, where the government funds 75% of the project cost and enterprises only need to bear 25%, the investment cost is highly cost-effective.

Upgrading Technology Solutions for Small and Medium Enterprises

To learn more about Technology Vouchers, here is a list of popular technology voucher programs for small and medium enterprises:

For business owners with multiple investments, an increase in Technology Voucher funding is good news. However, the difficulty of applying for Technology Vouchers remains. If the requirements of the program are not met during the application, procurement, and execution of Technology Vouchers, the funding may still seem out of reach.

For example, the Technology Voucher procurement process has standard requirements, including providing sufficient quotations based on project costs. For small and medium-sized enterprises without IT departments, everything from writing quotations to selecting the most suitable suppliers can be challenging. Having Technology Voucher consultants with specialized IT knowledge can help understand the required solutions for their own businesses, effectively utilize the Technology Voucher program, and successfully secure funding for upgrades.

For more information about TVP Technology Vouchers, contact our TVP Technology Voucher consultants at (+852 2129 0104) for a free case assessment.

Latest in 2022: BUD Application Assistance

Update December 2022: BUD Enterprise Support Program

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How to Apply for BUD?

Companies applying for BUD should fill out the application form online and provide the following documents for the applying company:

(i) A copy of the business registration certificate.
(ii) Copies of documents demonstrating the personal information of the responsible person/shareholder holding 30% or more ownership, such as Business Registration Department Form 1(a) or Annual Return Form (Form AR1) from the Companies Registry, etc.
(iii) Copies of documents proving that the applying company has substantial business operations in Hong Kong (please refer to Annex II for examples of proof).
(iv) Copies of documents proving the applying company’s annual turnover for the previous year (applying companies established in the current year are not required to provide this).
(v) Copies of documents proving the direct investment relationship between the applying company and the market business unit responsible for project execution in Free Trade Agreement markets, such as valid business licenses, valid contract for processing materials signed by both parties, etc. (only applicable to applications involving project execution by market units in Free Trade Agreement markets).
(vi) Brochures/print materials introducing the business/products/services of the applying company.

Is there a deadline for applying for the “BUD Special Fund”?

Currently, the “BUD Special Fund” accepts applications throughout the year, but the application deadline is subject to the availability of funds.

Can a company apply for funding for another project before completing one?

Companies can consider applying for funding for another project before completing one, as long as they do not exceed the approved number of projects (40) and the cumulative funding limit (HKD 6 million). However, they must provide information about the previously approved projects on the application form, including the project name, funding amount, and duration.

Applying companies should be aware that the progress or performance of previously approved projects may affect the approval of new project applications. The Program Management Committee will also consider the company’s capacity to manage multiple projects simultaneously, as well as the relevance and effectiveness of the projects.

What eligibility criteria do applying companies need to meet?

Companies applying for funding from the “BUD Special Fund” must meet the following eligibility criteria:

(a) Registered under the Business Registration Ordinance (Chapter 310) in Hong Kong,
(b) Non-listed companies, and
(c) Have substantial business operations within Hong Kong.

Substantial business operations refer to genuine business activities and transactions, including factors such as whether the company employs staff in Hong Kong, pays taxes, or engages in product/service transactions. Please note that companies with no substantial business or shell companies will not be considered to have substantial business operations in Hong Kong. When submitting the application form, provide the following documents as evidence:

(a) Company employee records,
(b) Company financial report records, and
(c) Records of business transactions and operations of the company.

(For detailed information on submitting documents related to substantial business operations, please refer to the “Application Guidelines.”)

Can a Hong Kong company under the umbrella of a Hong Kong or overseas listed company (non-listed) apply for funding?

Companies that are subsidiaries of listed companies, whether in Hong Kong or overseas, are considered separate legal entities from their parent companies. Therefore, as long as the subsidiary company in Hong Kong and overseas is a non-listed company, registered in Hong Kong under the Business Registration Ordinance (Chapter 310), and has substantial business operations within Hong Kong, it qualifies for applying for funding. The program is not limited to small and medium-sized enterprises (SMEs); any non-listed company registered in Hong Kong under the Business Registration Ordinance and with substantial business operations in Hong Kong is eligible to apply.

If a company is a registered listed company in mainland China, and its subsidiary is a non-listed company registered in Hong Kong, and the subsidiary in Hong Kong applies for funding under the program, but the project is implemented by the mainland China-based company (a listed company), is this feasible?

If the funded project is executed and benefits a company listed in mainland China, the funding application will not be approved.

Can eligible companies apply for funding for projects that are entirely implemented in Hong Kong?

If the project is entirely implemented in Hong Kong, it must be aimed at assisting the company in expanding and developing its business in mainland China in order to be eligible for funding.

In the project application form submitted, the company must demonstrate how the project will enhance its competitiveness in mainland China and/or promote the development of its business in mainland China through the relevant project.

Do funded projects require supervision? What are the supervisory measures?

To ensure the effective implementation of funded projects, approved projects are required to comply with the requirements stipulated by the “BUD Special Fund” during the implementation process. These requirements include:

The applying company needs to sign a designated contract with the implementing organization.

The company must provide its bank account for project fund management, and the financial transactions related to the project must undergo third-party financial auditing.

The company must submit midterm/final reports and audited accounts based on the project duration.

The implementing organization may also arrange on-site inspections for individual projects (approximately one day) to assess the progress and effectiveness of the project.

(Detailed requirements for submitting reports and audited accounts are provided in the “Application Guidelines.”)

6 Things You Need to Know Before Hiring a Government Funding Consultant for Your Technology Voucher Application

December 2023

The government currently offers various subsidy programs, such as Technology Voucher Program, BUD (Business Development Fund), and SME Market Promotion Fund, to assist small and medium-sized enterprises in promoting their businesses. However, the conditions and subsidy amounts for each program are different. You can choose which subsidy to apply for based on your current business situation and needs. Let us tell you the “Top 6 Things You Need to Know Before Seeking Government Subsidy Consultation.”

1. Understand the subsidies you can apply for

The government currently offers multiple subsidy programs to assist businesses in promoting various activities, especially small and medium-sized enterprises. However, the conditions and subsidy amounts vary for each program. You can choose which subsidy to apply for based on your current business situation and needs.

Here are some popular funding and subsidy programs in Hong Kong:

Government funding programsFunding programs and their contentThe highest cumulative funding amountFunding percentage
TVP – Technology Voucher ProgrammeThe program was launched in November 2016, providing funding to businesses for the purchase of technology services and solutions. Its goal is to assist Hong Kong businesses or organizations in enhancing overall productivity, improving service quality, and undergoing business transformation.HKD$ 600,00075%
BUD Special Fund BUDThe BUD program includes Mainland China initiatives and Free Trade Agreement initiatives. Through funding, it supports projects aimed at developing brands, upgrading and transforming, or expanding into the Mainland China and Free Trade Agreement economies. This is to enhance the competitiveness of Hong Kong’s small and medium-sized enterprises in the Mainland, ASEAN, and Free Trade Agreement markets.HKD$ 6,000,00050%
Retail Industry Human Resource Demand Management Technology Application Support Program (Export Markketing Fund)The “SME Market Promotion Fund” established by the Trade and Industry Department is specifically designed to help small and medium-sized enterprises expand their overseas markets (outside of Hong Kong) and promote their products in other regions. Supported projects include websites, online stores, online advertising, exhibitions, and more.HKD$ 800,00050%
Retail Industry Human Resource Demand Management Technology Application Support Program (ReTAAS)The program is specifically designed for the Hong Kong retail industry, aiming to enhance productivity in the retail sector by subsidizing the application of technology for managing workforce demand. Commonly supported projects include electronic payment systems, the establishment of online stores, POS systems, and more.HKD$ 50,00050%

 

2. The nature of the company’s business

In the Hong Kong market, there are several consulting companies that assist businesses in applying for government funding. Choosing a high-quality and professional consulting company can expedite the application process and ensure that you don’t take the wrong path. Consulting companies can generally be categorized into four types:：

  • Consulting Companies Specializing in Government Funding Applications: These companies primarily assist clients in applying for various types of government funding. Given the diversity of government funding programs, they usually specialize in a few specific funding categories.
    (5-star rating highest)

    Expertise: *****
    Price: ***
    Speed: *****

  • Technology or Marketing Companies Offering “Part-Time” Government Funding Application Services: These companies primarily focus on technology applications or marketing, but they also offer “part-time” services to help clients apply for government funding. For example, a company specializing in ERP systems may also assist clients in applying for technology vouchers, which align with the solutions they provide.
    (5-star rating highest)

    Expertise: *
    Price: ****
    Speed: **

  • Secretarial Firms or Accounting Practices Offering “Part-Time” Government Funding Application Services: Similar in nature to the second category, these companies are also prevalent. They sometimes assist clients in applying for more suitable government funding programs due to their access to clients’ financial information. Among the Big Four accounting firms in Hong Kong, some have dedicated departments for assisting clients in applying for government funding and loans, as part of their “value-added services.”
    (5-star rating highest)

    Expertise: ****
    Price: ***
    Speed: ***

  • Companies Engaging in Fraudulent Government Funding Schemes: You may have received calls like this, claiming, “We can apply for certain government funding for you, and your company doesn’t need to do anything. We’ll settle the accounts after the funding is approved.” These so-called “companies” only require your company’s name to assist you in applying for funding, while secretly preparing all the documents and evidence on your behalf. Remember: There’s no such thing as a free lunch. The government has recently increased efforts to combat false applications for pandemic-related funds. If you fall into the trap of scammers, both the applying business and its owner may face severe consequences.
    (5-star rating highest)

    Expertise: *
    Price: *****
    Speed: *

Therefore, businesses must carefully choose consulting companies and, through conversations, ascertain whether the consulting company has a thorough understanding of government funding. Additionally, businesses should consider reviewing relevant government funding information on the official government website as an initial step.

 

3. Understand the Consultant’s Background and Application Experience:

As mentioned in the previous point, some consultants have primary “day jobs” and are not specialized government funding consultants. Many times, they may be client managers or regular salespeople with no expertise in government funding. On the other hand, some consulting companies that specialize in government funding have team members who have worked in various funding agencies and are relatively familiar with the workings of funding applications. Therefore, businesses must carefully choose the right funding consultant and ascertain from their conversations whether the consultant has a sufficient understanding of government funding. Businesses should also consider reviewing relevant government funding information on the government’s official website or other relevant sources.

 

4. Consulting Company’s Consultation Mode

Many government funding consulting companies in the market can provide preliminary funding consultation services. Typically, consulting companies will first assess the business’s needs and eligibility before providing consultation and a quotation. However, some funding consulting companies may require an initial payment before commencing consultation. Businesses can decide whether to opt for paid consultation. If a funding consultant does not propose a face-to-face consultation, businesses should proactively request one. This allows businesses to better understand the consultant’s background and scale and gain a deeper understanding of various government funding procedures for future applications.

 

5. Consultant Service Content

Government funding consulting companies usually offer services such as preparing application forms and final reports. However, it’s essential to note that if a funding consultant claims to “create” applications for you to obtain more government funding, businesses should be aware of the legal risks. Defrauding government funds is a serious criminal offense, and there have been cases where companies were prosecuted. If any false documents are involved during the application or execution process, the applying business will bear 100% of the legal responsibility, and unscrupulous consulting companies may escape legal consequences.

 

6. Funding Consultant Company’s Fee Structure

  • Fee Based on Funding Percentage: Many funding consultants in the market adopt a “percentage of funding amount” fee structure, with commissions ranging from 8% to 25%. They often advertise as “no success, no fee.” As the name suggests, the benefit of this type of technology voucher consultant service is that if the technology voucher application fails, the applying business does not need to bear any financial costs (though costs related to human resources, time, business opportunities, etc., are unavoidable). Because consultant fees are calculated as a percentage, the higher the funding amount, the higher the consultant’s commission. This fee calculation method can motivate consultants to maximize the scale of technology voucher projects. If applying businesses are not familiar with technology solutions, they may be easily persuaded by consultants to use unnecessary system functionalities. While the short-term upfront fee is not very apparent due to receiving 75% funding from the government, the long-term system maintenance costs need to be paid at the full price, creating a long-term burden for the applying business.
  • Fixed Fee: A fixed fee is entirely uniform, or it may be calculated based on the workload of the application project, not tied to the funding amount. The fee generally ranges from thousands to tens of thousands of dollars. Since consultant fees are independent of the application project, consultants have no incentive to persuade client companies to use unnecessary technology solutions. The engagement process is more direct and fast. However, independent consultants may not have the structural motivation to maximize funding like intermediary consultants with a “no success, no fee” model. Therefore, it is essential to have a clear explanation before commissioning an independent consultant to establish trust.
  • For more details, please refer to: Link to a website.

The Innovation and Technology Fund allocated 4 billion dollars last year, doubling over the past 5 years.

December 2023

According to a report by the Hong Kong Economic Journal, the Hong Kong government’s funding for the “Innovation and Technology Fund” reached a new high in 2021, with actual expenditure doubling compared to 2017, reaching 4 billion Hong Kong dollars. The funding for the Technology Voucher Program (TVP) also increased to 590 million dollars, nearly 18 times higher than in 2017. TVP provides a maximum subsidy of up to 600,000 dollars to each company, aiming to support businesses in purchasing and implementing technology systems to enhance competitiveness and facilitate transformation. The maximum subsidy rate is 75%. TVP accepts applications throughout the year and allows projects to commence immediately after submission.

Read more: Introduction to the Technology Voucher Program (TVP).

The Director of the Innovation and Technology Bureau pointed out that during the pandemic, the Technology Voucher Program (TVP) has become very popular. In June 2021, the Innovation and Technology Bureau entrusted the Productivity Council to serve as the secretariat for TVP, which has helped expedite approvals. It is anticipated that approval rates should be more favorable by the middle of this year.

According to figures from the Innovation and Technology Bureau, in 2021, the Innovation and Technology Fund received over 11,300 applications, with 8,960 of them already approved. This represents a significant increase compared to 2017 when there were 3,000 applications and 1,500 approvals, marking an increase of 2.8 and 5 times, respectively. The actual expenditure of the Innovation and Technology Fund in the past year was approximately 4 billion dollars, which is more than twice the 1.33 billion dollars in 2017. The number of TVP applications and approved subsidies also saw a noticeable increase, rising from 577 applications in 2017 to 5,108 in 2021, with approved subsidies increasing from 31.7 million dollars to 590 million dollars, nearly 18 times higher.

Read more: Popular Projects under the Technology Voucher Program (TVP).

In 2020, during the pandemic, the government introduced the “Distance Business Program” to support businesses in continuing their operations through information technology. To date, the government has approved a total of 25,744 applications, involving over 21,000 companies, with 95% of them being small and medium-sized enterprises (SMEs), and the total funding amounting to approximately 1.7 billion dollars.

Hong Kong Funding Advisors Limited’s consultants for the Technology Voucher Program (TVP) have extensive experience. They can save businesses the time and reduce the chances of application failure when compared to self-application. Hong Kong Funding Advisors Limited has been specializing in TVP applications for many years, and their consultant team possesses senior-level experience. The most important guarantee they offer is a refund in case of an unsuccessful application.

Read more: 10 Common Questions About Applying for Technology Vouchers.

 

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