- Reduce profits tax for the Year of Assessment (“YOA”) 2017/18 by 75%, subject to a ceiling of HKD 30,000;
- Reduce salaries tax and tax under personal assessment for the YOA 2017/18 by 75%, subject to a ceiling of HKD 30,000;
- Increase the width of marginal tax bands from HKD 45,000 to HKD 50,000; increasing the number of tax bands from four to five, and adjusting the marginal tax rates to 2%, 6%, 10%, 14% and 17% respectively;
- Increase basic and additional child allowances from the current HKD 100,000 to HKD 120,000;
- Increase the allowance for maintaining a dependent parent or grandparent aged 60 or above from the current HKD 46,000 to HKD 50,000. The same increase applies to the additional allowance for taxpayers residing with parents or grandparents continuously throughout the year;
- Increase the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from the current HKD 23,000 to HKD 25,000. The same increase applies to the additional allowance for taxpayers residing with parents or grandparents continuously throughout the year;
- Raise the deduction ceiling for elderly residential care expenses from the current HKD 92,000 to HKD 100,000 for taxpayers whose parents or grandparents are admitted to residential care homes;
- Introduce a personal disability allowance for eligible taxpayers, at a rate on par with the current disabled dependent allowance of HKD 75,000; and
- Propose to allow the husband and wife the option to decide whether to elect for personal assessment starting from the year of assessment 2018-19.
- Waive rates for the FOUR quarters of the YOA 2018/19, subject to a ceiling of HKD 2,500 per quarter, for each ratable property.
- Provide an extra allowance to social security recipients, equal to two months 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;
- Pay the examination fees for candidates sitting for the 2019 Hong Kong Diploma of Secondary Education Examination, involving an expenditure of about 0 million.
- Hong Kong Montary Authority ("HKMA") will make plans to set up an academy of finance in collaboration with the Financial Services Development Council, the financial sector, tertiary institutions, professional training bodies and regulators for promoting cross-sector expertise sharing and collaboration in applied research.
Pilot Bond Grant Scheme
- Proposed to launch a three-year Pilot Grant Scheme to attract local, Mainland and overseas enterprises to issue bonds in Hong Kong. The amount of grant for each bond issuance is equivalent to half of the issue expenses, capped at HKD 2.5 million. Each enterprise can apply for a grant for two bond issuance at most. The HKMA will announce the details in due course.
Qualifying Debt Instrument Scheme
- Proposed to amend the qualifying debt instrument scheme by increasing the types of qualified instruments
- In addition to instruments lodged and cleared by the Central Moneymarkets Unit of the HKMA, debt securities listed on the Stock Exchange of Hong Kong Limited will also become eligible.
- Extended the scope of tax exemption from debt instruments with an original maturity of not less than seven years to instruments of any duration.
Asset and Wealth Management
- The regime for open-ended fund companies to be used as a fund vehicle and the relevant tax exemption arrangements can commence operation later in the year of 2018; and
- Review the existing tax concession arrangements applicable to the fund industry with regard to international requirements on tax co-operation.
Corporate Treasury Centres
- The Government will further amend the Inland Revenue Ordinance to extend the coverage of profits tax concession to specified treasury services provided by qualifying corporate treasury centres to all their onshore associated corporations.
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 100,000 120,000 Additional (in the year of birth) 100,000 120,000 Dependent parent / grandparent a. Aged 55 to 59 Basic 23,000 25,000 Additional 1 23,000 25,000 b. Aged 60 or above Basic 46,000 50,000 Additional 46,000 50,000 Dependent brother / sister 2 37,500 37,500 Single parent 132,000 132,000 Disabled dependent 75,000 75,000 Personal disability - 75,000 Additional deductions Self-education expenses 3 100,000 100,000 Home loan interest 4 100,000 100,000 Elderly residential care expenses 92,000 100,000 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
2017/18 and 2018/19 Standard tax rates 15%
iii. Progressive salaries tax rates
Net Chargeable Income 2017/18 First HKD 45,000 2% Next HKD 45,000 7% Next HKD 45,000 12% Remainder 17%
Net Chargeable Income 2018/19 and onwards First HKD 50,000 2% Next HKD 50,000 6% Next HKD 50,000 10% Next HKD 50,000 14% Remainder 17%
Business Category 2017/18 and 2018/19 Unincorporated Business 15% Corporation 16.5%
Taxpayer 2017/18 and 2018/19 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
Leasing period 2017/18 and 2018/19 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% Key money, construction fee etx. Mentioned in the lease 4.25% of the consideration if rent is also payable under the lease. Otherwise, same duty as for a sale of immovable property.
iii. Immovable Property transactionsScale 1
- Part 1 (applies to instruments of residential property) : A flat rate of 15% of the consideration or value of the property (whichever is higher)
- Part 2 (applies to instruments of non-residential property and certain instrument of residential property executed on or after 23 February 2013 but before 5 November 2016)
Sales Consideration Rats at Scale 1 (Part 2) 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%Scale 2
Sales Consideration Rats at Scale 1 (Part 2) Up to HKD 2,000,000 HKD 100 HKD 2,000,001 to HKD 2,176,470 HKD 100 + 10% of excess over HKD 2M HKD 2,176,471 to HKD 3,000,000 1.5% HKD 3,000,001 to HKD 3,290,330 HKD 45,000 + 10% of excess over HKD 3M HKD 3,290,331 to HKD 4,000,000 2.25% HKD 4,000,001 to HKD 4,428,580 HKD 90,000 + 10% of excess over HKD 4M HKD 4,428,581 to HKD 6,000,000 3% HKD 6,000,001 to HKD 6,720,000 HKD 180,000 + 10% of excess over HKD 6M HKD 6,720,001 to HKD 20,000,000 3.75% HKD 20,000,001 to HKD 21,739,130 HKD 750,000 + 10% of excess over HKD 20M Exceeding HKD 21,739,130 4.25%
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.
With effect from 20 November 2010, any residential property acquired on or after 20 November 2010, either by an individual or a company (regardless of where it is incorporated), and resold within 24 months (the property was acquired on or after 20 November 2010 and before 27 October 2012) or 36 months (the property was acquired on or after 27 October 2012), will be subject to a Special Stamp Duty (SSD). SSD is calculated by reference to the stated consideration or the market value of the property (whichever is higher), at the following rates for different holding periods of the property by the seller or transferor before disposal:-
Holding period The property was acquired on or after 20 November 2010 and before 27 October 2012 The property was acquired on or after 27 October 2012 6 months or less 15% 20% More than 6 months but for 12 months or less 10% 15% More than 12 months but for 24 months or less 5% 10% More than 24 months for 36 months or less - 10%
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.
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 2018-19 Budget" or contact our Tax Service Department (email: firstname.lastname@example.org) 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.
The Financial Secretary introduced the 2018/19 Budget and proposed tax measures on 28th February 2018.
Such proposed tax measures are required legislative amendments before implementation.
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