EN
Hong Kong 2017-18 Budget Summary
Economic Outlooks and Major Tax Rates
Summary of Hong Kong 2016/17 Budget

Hong Kong 2017-18 Budget Summary

Economic Outlooks and Major Tax Rates

Economic Outlooks for 2017

Source : The 2017-18 Budget (http://www.budget.gov.hk/2017/eng/io.html)

 

  • Forecast GDP growth in real terms at 2% to 3%
  • Forecast headline inflation is 1.8% and underlying inflation is 2%.

Major Proposed Measures

Tax Concessions and One-off Measures

Profits Tax
  • Reduce profits tax for the Year of Assessment (“YOA”) 2016/17 by 75%, subject to a ceiling of HKD 20,000;
Salaries Tax
  • Reduce salaries tax and tax under personal assessment for the YOA 2016/17 by 75%, subject to a ceiling of HKD 20,000;
  • Increase the width of marginal tax bands from HKD 40,000 to HKD 45,000;
  • Increase the disabled dependant allowance from HKD 66,000 to HKD 75,000 and the dependent brother or dependent sister allowance from HKD 33,000 to HKD 37,500;
  • Extend the entitlement period for deduction for home loan interest from 15 to 20 years, maintaining the current deduction ceiling of HKD 100,000 a year; and
  • Raise the deduction ceiling for self-education expenses from HKD 80,000 to HKD 100,000.
Rate
  • Waive rates for the FOUR quarters of the YOA 2017/18, subject to a ceiling of HKD 1,000 per quarter, for each rateable property.
Others
  • Provide an extra allowance to social security recipients, equal to one month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. Similar arrangements will apply to Low-income Working Family Allowance and Work Incentive Transport Subsidy.

Support for Small and Medium Enterprises ("SME")

  • Extend the application period for the Dedicated Fund on Branding, Upgrading and Domestic Sales for five years to June 2022;
  • Extend the application period for the ‘Special Concessionary Measures’ under the SME Financing Guarantee Scheme to 28 February 2018; and
  • Raise the cap on the contingent liability of the Hong Kong Export Credit Insurance Corporation underinsurance contracts from HKD 40 billion to HKD 55 billion.

First Registration Tax for Electric Vehicles

  • From 1 April 2017 to 31 March 2018, First Registration Tax of electric commercial vehicles, motor cycles and motor tricycles will continue to be fully waived; the First Registration Tax waiver for electric private cars will be capped at HKD 97,500.

Voluntary Health Insurance Scheme

  • Provide tax deduction for the purchase of regulated health insurance.

Use of Surplus

  • Earmark a total of HKD 30 billion to strengthen elderly services and rehabilitation services for persons with disabilities;
  • Earmark a total of HKD 20 billion for 26 projects in the coming five years to develop new or improve existing sports and recreation facilities in different districts;
  • Reserve HKD 10 billion for supporting I&T development in Hong Kong; and
  • Deploy HKD 1 billion for youth development.

Supporting Tourism

  • Waive the licence fees for 1,800 travel agents for one year;
  • Waive the licence fees for 2,000 hotels and guesthouses for one year;
  • Waive the licence fees for restaurants and hawkers and fees for restricted food permits for one year, benefiting 27,000 restaurants and operators in total; and
  • Allocate an additional sum of HKD 243 million in 2017-18 for five areas of work support the tourism industry.

Increase competitiveness

  • Set up a tax policy unit in the Financial Services and the Treasury Bureau in order to examine the international competitiveness of Hong Kong tax regime and address the problem of a narrow tax base.
  • Provide tax concession to attract aircraft leasing companies to develop their business in Hong Kong; and
  • Propose to extend Profits Tax exemption to attract more funds to domicile in HongKong.

Major Tax Rates for The Years 2016/17 and 2017/18

Salaries Tax

i. Personal tax allowances and deductions
 
2016/17
HKD
2017/18
HKD
Basic allowances
Single person’s allowance132,000132,000
Married person’s allowance264,000264,000
 
Additional allowances
Child
Basic100,000100,000
Additional (in the year of birth)100,000100,000
Dependent parent / grandparent
a. Aged 55 to 59
Basic23,00023,000
Additional 123,00023,000
b. Aged 60 or above
Basic46,00046,000
Additional46,00046,000
Dependent brother / sister 233,00037,500
Single parent120,000120,000
Disabled dependent66,00066,000
 
Additional deductions
Self-education expenses 380,000100,000
Home loan interest 4100,000100,000
Elderly residential care expenses92,00092,000
Contributions to retirement schemes18,00018,000
Approved charitable donations 535%35%
 
Notes
1 For dependent living with taxpayer.
2 For whom no child allowance is being claimed.
3 The maximum amount that can be claimed as deductible expense for training courses attended at approved institutions.
4 The entitlement period for tax deduction is 15 years.
5 The maximum deduction allowable is restricted to 35% of the taxpayer’s assessable income after deduction of allowable expenses and depreciation allowance.
 

 

ii. Standard salaries tax rates
 
2016/17 and 2017/18
Standard tax rates15%

 

iii. Progressive salaries tax rates
 
Net Chargeable Income2016/17
FirstHKD 40,0002%
NextHKD 40,0007%
NextHKD 40,00012%
Remainder17%
 
Net Chargeable Income2017/18 and onwards
FirstHKD 45,0002%
NextHKD 45,0007%
NextHKD 45,00012%
Remainder17%

 

Profits Tax

Business Category2016/17 and 2017/18
Unincorporated Business15%
Corporation16.5%

 

Property Tax

Taxpayer2016/17 and 2017/18
Property Owner15%

 

Stamp Duty

i. Shares transactions
 
Particular2016/17 and 2017/18
Contract Note for sale or purchase of any Hong Kong stock0.1% of the amount of the consideration or of its value on every sold note and every bought note
Transfer operating as a voluntary disposition inter vivosHKD 5 + 0.2% of the value of the stock
Transfer of any other kindHKD 5

 

ii. Property transactions
 
Sales Consideration2016/17 and 2017/18
Up to HKD 2,000,0001.5%
HKD 2,000,001 to HKD 2,176,470HKD 30,000 + 20% of excess over HKD 2M
HKD 2,176,471 to HKD 3,000,0003%
HKD 3,000,001 to HKD 3,290,330HKD 90,000 + 20% of excess over HKD 3M
HKD 3,290,331 to HKD 4,000,0004.5%
HKD 4,000,001 to HKD 4,428,580HKD 180,000 + 20% of excess over HKD 4M
HKD 4,428,581 to HKD 6,000,0006%
HKD 6,000,001 to HKD 6,720,000HKD 360,000 + 20% of excess over HKD 6M
HKD 6,720,001 to HKD 20,000,0007.5%
HKD 20,000,001 to HKD 21,739,130HKD 1,500,000 + 20% of excess over HKD 20M
Exceeding HKD 21,739,1308.5%

On top of the current ad valorem property transaction stamp duty (maximum at 4.5%), a Special Stamp Duty (“SSD”) is imposed on residential properties of all values at the point of resale if the properties are acquired on or after 20 November 2010 and resold within 24 months after acquisition.

In October 2012, the Government announced to adjust the SSD rates and extend the coverage period to 36 months for any residential properties acquired on or after 27 October 2012. Transactions took place between 20 November 2010 and 26 October 2012 are subject to the original SSD regime.

The prevailing SSD will have three levels of regressive rates for different holding periods:

  1. 20% if the property has been held for six months or less;
  2. 15% if the property has been held for more than six months but for 12 months or less; and
  3. 10% if the property has been held for more than 12 months but for 36 months or less.

In addition to SSD, a Buyer's Stamp Duty ("BSD") on residential properties acquired by any person (including a company incorporated) except a Hong Kong Permanent Resident is effected from 27 October 2012. BSD is to be charged at a flat rate of 15% on all residential properties, on top of the existing stamp duty and the special stamp duty, if applicable.

On 22 February 2013, the Financial Secretary announced that the Government would amend the Stamp Duty Ordinance to adjust the ad valorem stamp duty (“AVD”) rates and to advance the charging of AVD on non-residential property transactions from the conveyance on sale to the agreement for sale. Under the Government’s proposed amendments, any residential property (except that acquired by a Hong Kong Permanent Resident who does not own any other residential property in Hong Kong at the time of acquisition) and non-residential property acquired on or after 23 February 2013, either by an individual or a company, will be subject to the new rates of AVD. Transactions which took place before 23 February 2013 will be subject to the original stamp duty regime.

Starting from 5 November 2016, a flat rate (AVD rate) of 15% applies to residential property transactions, this new measures will continue to adopt the exemptions provided under the existing doubled ad valorem stamp duty (DSD) regime, which include:

  • allowing buyers to pay AVD at the basic rates (i.e. AVD rates at Scale 2) if they are Hong Kong permanent residents (HKPRs) and do not own any other residential property in Hong Kong at the time of acquisition of the residential property; and
  • setting a six-month time frame for HKPR-buyers having acquired a new residential property to dispose of their original property.

 

iii. Leases
 
Leasing period2016/17 and 2017/18
Not defined or is uncertain0.25%
Specified in the lease as not exceeding 1 year0.25%
Exceeding 1 year but not exceeding 3 years0.5%
Exceeding 3 years1%

 

Estate Duty

The Government had abolished the Estate Duty with effect from 11 February 2006 pursuant to the Revenue (Abolition of Estate Duty) Ordinance 2005.

Detailed Version of Our Smmary

Please visit [ pdf version ] for detailed version of our summary on the Hong Kong 2017-18 Budget.

Further Information

The above information is mainly extracted from the website of the “The Hong Kong 2017-18 Budget”.

Please visit "The Hong Kong 2017-18 Budget" or contact us for further details.

 
Reference
[ 22nd February 2017 ]

 

Disclaimer

The general tax information on the above content is provided for your ease reference and is not intended to replace any tax advice or other professional advice. Clients should clearly acknowledge and confirm that final decision is reserved by Hong Kong Inland Revenue Department through its tax assessment process. In the event of any inconsistency between the English and Chinese versions of this content, the English version shall prevail.

  Remark

 

SEND US AN ENQUIRY

Success!

Thank you very much for your enquiry and interested in our company service.

We will care about your request as soon as possible.

BACK TO TOP