The Hong Kong government has issued a consultation paper on the future of the territory’s estate tax, which may lead to the eventual abolition of the levy.
Among the measures up for consideration, the consultation proposes exemptions for non-Hong Kong domiciled investors, exemptions on certain classes of assets or complete elimination of the levy.
Hong Kong’s estate tax laws are applied on a territorial principle, meaning tax is only levied on property situated within Hong Kong. However, this means that the deceased's nationality, residence or domicile are completely irrelevant in determining whether or not an estate duty charge arises.
The tax is levied at progressive rates with no estate duty being payable where the value of the estate situate in Hong Kong is less than HK$7.5 million (US$962,000) and a maximum rate of 15% being levied on the value of assets exceeding HK$10.5 million (US$1,350,000.) A 10% rate is levied on estates valued between HK$9 million and HK$10.5 million.
The government collects some HK$1.5 billion per year from estate duty revenues.
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