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Hong Kong Gazettes Tax-Cutting Budget Bill

Tuesday, March 13, 2018

On March 9 Hong Kong's Inland Revenue Department gazetted the Inland Revenue (Amendment) Bill 2018, containing measures worth HKD30bn (USD3.82bn) announced in the Budget.

Adjustments to salaries tax and tax under personal assessment will reduce tax revenue by HKD6.43bn per year. This includes increasing the number of tax bands from four to five with marginal rates of two percent, six percent, 10 percent, 14 percent, and 17 percent, and widening the income separating the bands from HKD45,000 to HKD50,000 each. These adjustments will benefit 1.34 million taxpayers.

Other measures include:

Increasing both the child allowance for each eligible child and the additional child allowance in respect of each child born in the year of assessment from HKD100,000 to HKD120,000. This measure will benefit 335,000 taxpayers and reduce tax revenue by HKD1.31bn a year.

Increasing both the dependent parent/grandparent allowance and the additional dependent parent/grandparent allowance for each eligible parent/grandparent from HKD46,000 to HKD50,000 (for those aged 60 or above, or with disabilities) and from HKD23,000 to HKD25,000 (for those aged 55 or above but below 60); and raising the deduction ceiling for elderly residential care expenses for each eligible parent/grandparent from HKD92,000 to HKD100,000. These measures will benefit 607,000 taxpayers and reduce tax revenue by HKD580m a year.

Introducing a new personal disability allowance of HKD75,000 for eligible taxpayers. This measure will reduce tax revenue by HKD450m a year.

In addition, the 2018-19 Budget also proposes a one-off reduction of salaries tax, tax under personal assessment and profits tax for the year of assessment 2017-18 by 75 percent, subject to a ceiling of HKD30,000 per case. The reduction will be reflected in taxpayers' final tax payable for the year of assessment 2017-18. The proposed one-off reduction will benefit 1.88 million taxpayers of salaries tax and tax under personal assessment, and 142,000 tax-paying corporations and unincorporated businesses. The revenue forgone will amount to HKD25.5bn in total.