While the 2012-13 Annual Report of the Inland Revenue Department (IRD) showed that it collected a new record in taxes of HKD242.1bn (USD31.2bn) during the year, the annual increase in revenue collections declined to only 1.6 percent, compared to the 14 percent growth seen in 2011-12.
Hong Kong's Commissioner of Inland Revenue Wong Kuen-fai introduced the Report and commented that the decline in revenue growth was partly attributable to the concessionary revenue measures introduced during the year, but, in addition, reflecting the slowdown in economic growth, the increase in assessable profits of business enterprises and assessable income of employees for the year of assessment 2011-12 (and payable in 2012-13) both narrowed significantly.
A particular rise in revenue came mainly from collections of stamp duty for property transactions. In that regard, he said that the "exuberant" property market in 2012-13 had brought in more stamp duty collections from property transactions. On the other hand, the decrease in the turnover of the stock market caused a relatively big reduction in the stamp duty collections from share transfers.
Nevertheless, the Report noted that profits tax still contributed the largest part of the total revenue collected, followed by salaries tax. Together they made up 72.7 percent of the total revenue collected.
In a review of the tax law amendments made during the year, he pointed out that the Government has, in the era of economic globalization had to keep in pace with the development of the local economy and international trends, and also to address the overheated property market.
In fact, the Government introduced six revenue-related bills in the 2012-13 legislative session; the highest number of bills ever handled by the IRD in one single legislative session.
Aside from the bill to effect budgetary changes, the three bills that were enacted in the 2012-13 legislative session were to provide a legal framework for Hong Kong to enter into standalone tax information exchange agreements (TIEAs); to provide a taxation framework for some common types of Islamic bonds on par with that for conventional bonds; and to facilitate a two-way commingled pool arrangement to reinforce Hong Kong's international position in horse racing.
The remaining two stamp duty amendment bills, relating to the measures for cooling down the overheated property market, are still being scrutinized by the Legislative Council.
He confirmed that the IRD is committed to reducing taxpayers' compliance cost. For example, targeted at the small and medium enterprises, the authority strengthened the electronic filing of the Employer's Return during the year. Employers can now upload and submit the details of employees' remuneration via the internet using the approved Employer's Software.
In addition, the maximum number of forms for filing of employees' remuneration under eTAX has been increased to cater for the need of more employers. The electronic data so provided will be transmitted to the IRD's computer system for direct processing. The data will be pre-filled onto the respective employees' electronic tax returns on the next day, bringing convenience to employers, employees and the IRD.
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