The Tax Hub

On 28 February 2018, Hong Kong Financial Secretary Paul MP Chan delivered the 2018-19 Budget. The tax-related measures of the budget include:

• A reduction in the profits tax for the year of assessment 2017-18 by 75%, subject to a ceiling of HKD 30,000 (also applies for salaries tax and tax under personal assessment);
• An increase in the marginal bands for salaries tax from the current HKD 45,000 to HKD 50,000, along with an increase in the number of bands from 4 to 5 and an adjustment of the rates with effect from year of assessment 2018-19 as follows:
  • up to HKD 50,000 - 2%
  • over HKD 50,000 up to 100,000 - 6%
  • over HKD 100,000 up to 150,000 - 10%
  • over HKD 150,000 up to 200,000 - 14%
  • over HKD 200,000 - 17%
• An increase in the types of instruments eligible for the qualifying debt instrument scheme to include debt securities listed on the Stock Exchange of Hong Kong, as well as an extension of the scope of tax exemption from debt instruments with an original maturity of not less than seven years to instruments of any duration;
• An extension of the coverage of the profits tax concession to specified treasury services provided by qualifying corporate treasury centres to all their onshore associated corporations; and
• The enhancement of tax concessions for capital expenditure incurred by enterprises in procuring eligible energy efficient building installations and renewable energy devices by allowing the tax deduction to be claimed in full in one year instead of the current time frame of five years.

The budget also notes the plans for a 300% tax deduction on the first HKD 2 million in eligible R&D expenditure, with a 200% deduction for expenditure exceeding that amount, as well as the implementation of the two-tiered profits tax rates system (previous coverage).

For more information, click the following links for the Hong Kong 2018-19 Budget webpage and an overview of the Budget measures published by the Inland Revenue Department.