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Hong Kong

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Budget for 2008/09

The Budget for the financial year 2008/09 was presented by the Financial Secretary on 27 February 2008. Unless stated otherwise, the Budget proposals, when passed, will take effect on 1 April 2008. Details of the budgetary proposals affecting taxation are summarized below:

Special tax relief for period 2007/08

A one-off reduction of 75% of the 2007/08 final tax liability in respect of salaries tax, profits tax, property tax and tax under personal assessment is proposed. The reduction is subject to a ceiling of HKD 25,000. By way of example, for a person whose final tax liability for the financial year 2007/08 is HKD 50,000, the reduction would be HKD 37,500, however it is restricted to a ceiling of HKD 25,000 thus leaving a balance of HKD 25,000 to be paid as tax.

Corporate tax

The following changes have been proposed with regard to the corporate tax regime:

-   the standard tax rate and profit tax rate are to be reduced from 16% to 15% and 17.5% to 16.5%, respectively;
-   the deduction ceiling for approved charitable donations will be raised from 25% to 35% of adjusted assessable income; and
-   capital expenditure deduction on specific environmental protection facilities, such as machinery or plant, is to be provided with a 100% capital expenditure deduction. Installations forming part of a building or structure are to be provided with a 20% deduction per annum over 5 consecutive years.

Other taxes

Other proposals announced in the Budget are as follows:

-   the business registration fee of HKD 2,000 and HKD 73 for business registration certificates and branch registration, respectively, is to be waived for the year 2008/09; and
-   the Hotel Accommodation Tax is to be reduced from 3% to 0%.

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