Hong Kong ’08 budget proposes HK$75 billion in relief measures
HONG KONG, Feb. 27 – In his annual budget speech, Financial Secretary John Tsang announced a host of changes amounting to HK$75 billion tax reductions.
While legislative amendments are required for implementing each of the relief measures proposed in the budget, the changes should provide a boost to the territory’s economy. Here’s a look at some of the major changes:
Individuals subject to Salaries Tax or Tax under Personal Assessment
Individuals subject to Salaries Tax or tax under Personal Assessment will enjoy a reduction of 75 perrcent of the final tax for the year of assessment 2007-08, subject to a ceiling of HK$25,000 per case.
The basic allowance and single parent allowance will be increased from HK$100,000 to HK$108,000, and married person’s allowance from $200,000 to $216,000.
Tax bands will be widened from HK$35,000 to HK$40,000 each.
Businesses subject to Profits Tax
Businesses subject to Profits Tax will enjoy a reduction of 75 percent of the final tax for the year of assessment 2007-08, subject to a ceiling of HK$25,000 per case.
The standard rate will be lowered from 16 percent to 15 percent, and the corporation profits tax rate from 17.5 percent to 16.5 percent.
In addition, there will be accelerated deduction for capital expenditure on specified environmental protection facilities. For machinery or plant, 100 percent deduction will be allowed for the capital expenditure incurred. For installations forming part of a building or structure, 20 percent deduction will be allowed for each year in five consecutive years.
Business Registration Fee waved for 2008-09
New businesses with date of commencement of business falling in the year 2008-09 will be relieved from paying business registration fee of HK$2,000 for the first year and existing businesses will not be required to pay a registration fee of HK$2,000 when they renew their registration in the year 2008-09.
Businesses however, are still required to pay the levy for the Protection of Wages on Insolvency Fund, which is HK$450 for 1-year certificate on or after March 14, 2008
After enactment of the relevant legislation, the Inland Revenue Department will automatically apply the new allowances, tax rates and bands in calculating the 2008-09 provisional tax. Taxpayers are only required to complete their tax returns for 2007-08 in the normal manner.
The IRD will announce the application and refund procedures after the relevant legislation is passed by the Legislative Council.