Business Boom Means More Paid In Tax To Hong Kong Last Year

by Mary Swire, Tax-News.com, Hong Kong

04 April 2006

Hong Kong's top profits tax payer paid HK$2.54 billion (US$327 million) in tax in 2005-06 as the total amount of profits assessed for tax grew by 16% compared to the previous year, latest figures by the Inland Revenue Department show.

The data showed that Hong Kong's top earner paid HK$101 million in salaries tax in 2005-06. Up to February 28 in the financial year 2005-06, the total salaries tax assessed was HK$39 billion, an increase of some 9% over the total of HK$35.9 billion for the corresponding period in 2004-05.

According to the department's figures, the amount of tax paid by the top 10 salaries taxpayers ranged from HK$13 million to HK$101 million while the amount of tax paid by the top 10 profits taxpayers ranged from HK$560 million to HK$2.54 billion.

The department said the amounts of tax paid by a few taxpayers were particularly high, probably because they were in receipt of income other than salaries. Bonuses, commissions, allowances and share option gains also form part of the assessable income of a taxpayer.

The total profits tax assessed for the same 11-month period was $66.9 billion, an increase of 16% over the total of $57.7 billion in the previous year.

The government attributed the increases in salaries tax and profits tax assessed to favourable business performance and an improved labour market.

The actual salaries tax and profits tax collections for the whole year 2005-06 will be announced when the year-end accounts are finalised later this month.

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