HK Tax Relief Bill Gazetted Today

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

13 April 2006

Hong Kong's Revenue Bill 2006, which seeks to implement tax relief measures announced in the 2006-07 Budget, is being gazetted today.

Under the terms of the bill, the Inland Revenue Ordinance will be amended to put in place two proposals relating to salaries tax and personal assessment. It will be tabled at the Legislative Council on April 26.

The first proposal is to lower the marginal rates of the second, third and top tax bands by one percentage point from the existing levels of 8%, 14% and 20% to 7%, 13% and 19%. The standard rate will remain unchanged.

The proposed reduction is intended to benefit salaried taxpayers and those under personal assessment. It will reduce the tax payable by nearly a million people - three-quarters of taxpayers.

The second proposal is to extend the limit for deduction for home loan interest from seven to 10 years, subject to the maximum annual deduction of $100,000.

Around 400,000 taxpayers will benefit from the home loan interest deduction in 2006-07, and some 80,000 taxpaying home owners whose seven-year entitlement period for the deduction has expired or is due to expire will benefit immediately.

It is estimated that the proposal to reduce the marginal tax rates will cost the Government $1.5 billion in a full year. The proposal to extend the entitlement period for home loan interest deduction is predicted to cost the Government $1.2 billion in 2006-07.

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