The Inland Revenue (Amendment) Bill 2018 was passed by the Legislative Council on 16 May 2018. The Bill gives effect to the concessionary tax measures proposed in the Budget for 2018/19.
The concessionary tax measures approved by the Legislative Council are as follows:
- a 75% one-off reduction in profits tax, salaries tax and tax under personal assessment for the year of assessment (YA) 2017/18 is provided, subject to a maximum of HKD 30,000 per case;
- with effect from YA 2018/19, tax bands and marginal tax rates are adjusted. The previous and new tax bands and marginal tax rates are shown in the table below:
Previous (YA 2017/18)
New (from YA 2018/19 onwards)
net chargeable income (tax band) (HKD) rate (%) net chargeable income (tax band) (HKD) rate (%) on the first 45,000 2 50,000 2 on the next 45,000 7 50,000 6 on the next 45,000 12 50,000 10 on the next 50,000 14 remainder 17 17 - the following allowances are increased, as well as a personal disability allowance introduced from YA 2018/19 onwards:
Previous (YA 2017/18) (HKD)
New (from YA 2018/19 and onwards) (HKD) China allowance – for each of the 1st to 9th child 100,000 120,000 – additional child allowance for each child born during YA 100,000 120,000 dependent parent/grandparent allowance (per dependant aged 60 or above): – not residing with taxpayer 46,000 50,000 – residing with taxpayer 92,000 100,000 dependent parent/grandparent allowance (per dependant aged 55-59): – not residing with taxpayer 23,000 25,000 – residing with taxpayer 46,000 50,000 personal disability allowance Not applicable 75,000 - the deduction ceiling for elderly residential care expenses is increased from HKD 92,000 to HKD 100,000 from YA 2018/19.
In addition, a separate Bill (Inland Revenue (Amendment) (No.4) Bill 2018) was gazetted on 18 May 2018 providing tax deduction for taxpayers purchasing eligible health insurance products for themselves or specified relatives under the Voluntary Health Insurance Scheme (VHIS). According to the VHIS tax deduction scheme, a taxpayer can claim deductions under salaries tax and personal assessment for VHIS premiums paid up to HKD 8,000 per insured person for insurance policies procured for the benefit of the taxpayer and all specified relatives (irrespective of the number). This Bill will be introduced to the Legislative Council on 23 May 2018.