- Reduce profits tax for the Year of Assessment (“YOA”) 2016/17 by 75%, subject to a ceiling of HKD 20,000;
- 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.
- 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.
- 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.
i. Personal tax allowances and deductions
Basic allowances Single person’s allowance 132,000 132,000 Married person’s allowance 264,000 264,000 Additional allowances Child Basic 100,000 100,000 Additional (in the year of birth) 100,000 100,000 Dependent parent / grandparent a. Aged 55 to 59 Basic 23,000 23,000 Additional 1 23,000 23,000 b. Aged 60 or above Basic 46,000 46,000 Additional 46,000 46,000 Dependent brother / sister 2 33,000 37,500 Single parent 120,000 120,000 Disabled dependent 66,000 66,000 Additional deductions Self-education expenses 3 80,000 100,000 Home loan interest 4 100,000 100,000 Elderly residential care expenses 92,000 92,000 Contributions to retirement schemes 18,000 18,000 Approved charitable donations 5 35% 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 rates 15%
iii. Progressive salaries tax rates
Net Chargeable Income 2016/17 First HKD 40,000 2% Next HKD 40,000 7% Next HKD 40,000 12% Remainder 17%
Net Chargeable Income 2017/18 and onwards First HKD 45,000 2% Next HKD 45,000 7% Next HKD 45,000 12% Remainder 17%
Business Category 2016/17 and 2017/18 Unincorporated Business 15% Corporation 16.5%
Taxpayer 2016/17 and 2017/18 Property Owner 15%
i. Shares transactions
Particular 2016/17 and 2017/18 Contract Note for sale or purchase of any Hong Kong stock 0.1% 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 vivos HKD 5 + 0.2% of the value of the stock Transfer of any other kind HKD 5
ii. Property transactions
Sales Consideration 2016/17 and 2017/18 Up to HKD 2,000,000 1.5% HKD 2,000,001 to HKD 2,176,470 HKD 30,000 + 20% of excess over HKD 2M HKD 2,176,471 to HKD 3,000,000 3% HKD 3,000,001 to HKD 3,290,330 HKD 90,000 + 20% of excess over HKD 3M HKD 3,290,331 to HKD 4,000,000 4.5% HKD 4,000,001 to HKD 4,428,580 HKD 180,000 + 20% of excess over HKD 4M HKD 4,428,581 to HKD 6,000,000 6% HKD 6,000,001 to HKD 6,720,000 HKD 360,000 + 20% of excess over HKD 6M HKD 6,720,001 to HKD 20,000,000 7.5% HKD 20,000,001 to HKD 21,739,130 HKD 1,500,000 + 20% of excess over HKD 20M Exceeding HKD 21,739,130 8.5%
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:
- 20% if the property has been held for six months or less;
- 15% if the property has been held for more than six months but for 12 months or less; and
- 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.
Leasing period 2016/17 and 2017/18 Not defined or is uncertain 0.25% Specified in the lease as not exceeding 1 year 0.25% Exceeding 1 year but not exceeding 3 years 0.5% Exceeding 3 years 1%
The Government had abolished the Estate Duty with effect from 11 February 2006 pursuant to the Revenue (Abolition of Estate Duty) Ordinance 2005.
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.
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.
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