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Hong Kong's New Budget Contains Tax Relief Measures

by Mary Swire,, Hong Kong

01 March 2018

Hong Kong's new Budget contained a number of new tax perks for individuals and measures to promote the adoption of environmentally friendly technologies, but few measures for businesses.

The key measure, intended to provide one-off relief to a broad range of taxpayers, is a proposal to reduce by 75 percent profits tax, salaries tax, and tax under personal assessment for the year of assessment 2017-18, capped at HKD30,000 (USD3,830) per case. The measure will benefit around 2.02 million taxpayers.

Any overpaid tax that results from legislative delays will be refunded. The proposed tax reduction is not applicable to property tax, although rental income may be eligible under personal assessment.

In addition, in respect of profits tax, the Budget proposes to amend the qualifying debt instrument scheme to expand the types of qualifying instruments. In addition to instruments lodged and cleared by the Central Moneymarkets Unit of the Hong Kong Monetary Authority, debt securities listed on the Hong Kong Stock Exchange will also become eligible.

The Government will also extend the scope of tax exemption from debt instruments with an original maturity of not less than seven years to instruments of any duration.

The Budget also announces a tax relief intended to support businesses to make investment in green technology. Since the year of assessment 2008-09, to encourage the business community to adopt environmentally friendly machinery and equipment, capital expenditure on such equipment has been fully deductible in the first year of assessment. The deduction period for capital expenditure on renewable energy and energy-efficient building installations was previously shortened from 25 years to 5 years. The Budget proposes to align the two periods, to enable such expenditure to be deducted fully in the first year.

The Budget mainly features personal income tax reform measures, including significant alterations to the personal income tax schedule. The top 17 percent personal income tax rate will remain but it will begin to be chargeable for incomes above HKD200,000, up from HKD135,000. The Budget includes a wide range of tax reliefs for working families and persons with disabilities. It also proposes to allow married couples to elect to file separately.

TAGS: Insurance | tax | property tax | energy | insurance | legislation | tax rates | Hong Kong | Health Insurance

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