Hong Kong Announces Tax Credit Handout In 2020 Budget

Mary Swire, Tax-News.com, Hong Kong

03 March, 2020

Hong Kong's 2020 Budget includes plans for a one-off reduction of profits tax, salaries tax, and tax under personal assessment.

The Budget was delivered on February 26. It provides for a one-off reduction of profits tax, salaries tax, and tax under personal assessment, for the year of assessment 2019-2020 by 100 percent. This is subject to a ceiling of HKD20,000 (USD2,566) per case.

The tax reduction will reduce the amount of tax payable by taxpayers for the year of assessment 2019-2020. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment as usual. Once the legislation has been enacted, the Inland Revenue Department will implement the reduction in the final assessment.

The tax reduction will only be applicable to the final tax for the year of assessment 2019-2020, but will not apply to the provisional tax of the same year. Taxpayers will therefore still be required to pay the provisional tax on time, as stipulated in the demand notes that have been issued to them. The provisional tax paid will be applied in payment of the final tax for the year of assessment 2019-2020 and provisional tax for the year of assessment 2020-2021. Any excess balance will be refunded.

The proposed reduction will not be applicable to property tax, but individuals with rental income, if eligible for personal assessment, may be able to avail themselves of the reduction under personal assessment. For taxpayers separately chargeable to salaries tax and profits tax, the reduction will be available under each of the tax types. For a taxpayer with business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment.

The measure is expected to cost the Government HKD20.8bn.

TAGS: individuals | compliance | tax | business | tax compliance | property tax | law | international financial centres (IFC) | tax thresholds | offshore | legislation | Hong Kong | tax breaks | tax reform | individual income tax |




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