New Tax Concessions for Hong Kong – One-time Offer for Taxpayers
A new tax bill was passed by the Hong Kong Legislative Council and gazetted on 15 November 2019. It will offer tax concessions to as many as 1.91 million taxpayers. In addition, the bill will also benefit 145,000 tax-paying corporations and unincorporated businesses. These tax concessionary measures reduce salaries tax, tax under personal assessment and profits tax for the Year of Assessment 2018/19 by 100%, subject to a ceiling of $20,000 per case.
Reducing Profits Tax, Salaries Tax and Tax Under Personal Assessment for the Year of Assessment 2018/19
For profits tax, the ceiling of the tax reduction is applied to each business.
For salaries tax, the ceiling is applied to each individual taxpayer; but for couples jointly assessed, the ceiling is applied to each couple (i.e. capped at $20,000 in total).
For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If a taxpayer elects for personal assessment jointly with his/her spouse, the tax reduction is capped at $20,000 for the couple.
The proposed tax reduction is not applicable to property tax. Nevertheless, individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.
A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he would get if he was not assessed under personal assessment. The exact position will need to be evaluated case by case.
One Time Benefit from New Tax Concessions in Hong Kong
This tax concession is a one-time offer from the government to help ease the taxpayers’ burden. Taxpayers should file their tax returns as usual. The Inland Revenue Department will effect the reduction in the Year of Assessment 2018/19.
Low Taxes a Boost During Uncertain Economy
These tax concessionary measures will cost the Hong Kong Special Administrative Region government $20.7 billion, benefiting about 1.91 million taxpayers. This could help boost the economy during the difficult time faced by people in Hong Kong. The tax concessions have been warmly welcomed by taxpayers. The generous concessions will help stimulate the economy and bring Hong Kong out of recession. Only time will tell if this is enough, but the city is looking forward to the benefits for the people and businesses from the lower taxes.