Wednesday, October 11, 2017
Hong Kong will undertake an even greater cut to the profits tax rate for small firms, Chief Executive Carrie Lam has said, pledging more relief than was set out two years ago in her pre-election manifesto.
Designed to reduce the burden on small firms and encourage enterprise and innovation, Lam had proposed that a 10 percent profits tax rate should apply to the first HKD2m of a company's profits (USD256,000).
In her Policy Address of October 11, Lam said she would table legislation for a profits tax rate cut to 8.25 percent on the first HKD2m, while maintaining the current 16.5 percent tax rate for any additional profits; and a 300 percent tax deduction on the first HKD2m of eligible R&D expenditure and a further 200 percent for any additional expenditure.
"To ensure that the tax benefits will target small and medium-sized enterprises (SMEs), we will introduce restrictions such that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate," said Lam.
A bill to implement the two initiatives will now be submitted to the Legislative Council for approval.