Tax Revenues Soar To New High In Hong Kong

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

03 May 2007

Total tax revenue collected in Hong Kong soared to a record high of HK$155 billion (US$19.8 billion) in 2006-07, up 7% on the last financial year, Commissioner of Inland Revenue Alice Lau announced on Wednesday.

Income from profits tax rose 3% over a year earlier, to HK$71.9 billion, while that from salaries tax grew 3% to HK$38.6 billion. An 8% rise was recorded in revenue from property tax and personal assessment, bringing the income to HK$4.8 billion.

Estate-duty revenue plummeted 54%, to HK$778 million, while that from stamp duties soared 40%, to HK$25.1 billion. The income from other taxes also rose 5%, to HK$1.8 billion, while revenue from betting duty nudged up 1%, to HK$12 billion.

The Inland Revenue Department issued 1.86 million individual tax returns yesterday, ahead of the June 2 deadline. Sole proprietors of unincorporated businesses have until August 2 to file their tax returns.

In this year's Budget, the Financial Secretary proposed waiving 50% of salaries tax and tax under personal assessment for 2006-07, subject to a ceiling of HK$15,000 per case.

"Salary earners should complete this year's tax return as usual. No application is needed for the waiver. Individuals with rental or business income will need to elect for personal assessment, if eligible, to enjoy the waiver. They can make the election in this year's tax return. The department will check, in each case, whether the election will reduce the taxpayer's liability, and will make the assessment in the way to his or her advantage," Lau said.

On the proposed tax concessions in connection with the child allowance, Lau revealed that if a taxpayer has a baby born in 2007-08 - before she or he submits this year's tax return - the individual can include the relevant details so the department can take them into account in assessing the provisional tax payable.

"If the baby is born after the tax return is submitted, he can apply to have his provisional tax held over after receipt of the tax bill," she explained.

On the proposal to revert the marginal tax bands and tax rates under salaries tax to their 2002-03 levels, the Commissioner said that if the proposals are endorsed by the Legislative Council, the department will work out this year's tax bills effecting these tax concessions.

Taking account of the tax concessions proposed in this year's Budget, Lau estimated the income from total earnings and profits tax will drop to HK$112 billion in 2007-08. To encourage e-filing, an automatic extension of one month to July 3 is granted to last year's e-filers. Other e-filers will be granted a two-week extension, to June 16.

Recommended