April 2024 / Hong Kong

April 6 2024

HK, Implementation of Two-Tiered Standard Rates for Salaries Tax and Tax Under Personal Assessment for 2024/25

The Financial Secretary proposed to implement a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25.

Currently, salaries tax in Hong Kong is calculated at progressive rates from 2 per cent to 17 per cent on taxpayers net chargeable income or at a standard rate of 15 per cent on net income, whichever is lower. The standard rate is normally adopted for high earners.

In calculating the amount of tax for taxpayers whose net income (before deduction of allowances) exceeds $5 million and whose salaries tax or tax under personal assessment is to be charged at a standard rate, the first $5 million of their net income will continue to be subject to the standard rate of 15% while the portion of their net income exceeding $5 million will be subject to the standard rate of 16%.

The new regime is expected to affect 12,000 taxpayers, or just 0.6 per cent, and predicted that the move would raise HK$910 million per year for the government.

Source: ird.gov.hk

April 10 2024

HK, reducing profits tax, salaries tax and tax under personal assessment for 2023/24

The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2023/24 by 100%, subject to a ceiling of $3,000 per case.

For profits tax, the ceiling of the tax reduction is applied to each business. For salaries tax, the ceiling is applied to each individual taxpayer; but for married couples jointly assessed, the ceiling is applied to each married couple (i.e. capped at $3,000 in total). For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If a taxpayer elects for personal assessment jointly with his/her spouse, the tax reduction is capped at $3,000 for the married couple.

The proposed tax reduction is not applicable to property tax. Individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.

A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he/she would get if he/she was not assessed under personal assessment. The exact position will need to be evaluated case by case.

To elect for personal assessment, eligible taxpayers should complete Part 7 of his/her tax return for individuals (BIR60) for the year of assessment 2023/24. Individuals having salaries income only, but no business profits and rental income, need not elect for personal assessment.

The proposed reduction will reduce taxpayers’ amount of tax payable for the year of assessment 2023/24. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2023/24 as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment. For any final assessment for the year of assessment 2023/24 issued before the enactment of the law, the Inland Revenue Department will make a reassessment after the enactment. Taxpayers are not required to make any applications or enquiries to the Department.

The proposed tax reduction will only be applicable to the final tax for the year of assessment 2023/24, but not to the provisional tax of the same year. Therefore, taxpayers are still required to pay their provisional tax on time despite the proposed reduction measure. The provisional tax paid will be applied to pay the final tax for the year of assessment 2023/24 and the provisional tax for the year of assessment 2024/25. Excess balance, if any, will be refunded.

Source: ird.gov.hk

April 30 2024

HK updating tax jurisdictions

The HKSAR Government announces on 30th April that based of OECD recommendations, Hong Kong will amend the list of tax jurisdictions on automatic exchange of financial account information in tax matters (AEOI) under the inland revenue ordinance.

9 Jurisdictions have been removed from the list as they have yet to activate exchange relationships for AEOI with Hong Kong. Bahrain, Belize, Marshall Islands, Montserrat, Nauru, Niue, Saint Vincent & the Grenadines, Seychelles, and Trinidad & Tobago.

11 Jurisdictions have been added to the list which have activated exchange relationships for AEOI with Hong Kong. Azerbaijan, Ecuador, Jamaica, Kazakhstan, Kenya, Maldives, Nigeria, Oman, Pakistan, Peru, and Thailand.

Since September 2018, Hong Kong has conducted AEOI with several other jurisdictions as advocated by the OECD, with the aim to enhance tax transparency and combat cross-border tax evasion.

Source: news.gov.hk