Analysis
2016/17 Budget Highlights
Hong Kong Tax News
Major Proposed Changes
Tax Rebates
- 75% profits tax rebate, capped at HK$20,000 for the year of assessment 2015/16 final tax payable
- 75% salaries tax and tax under personal assessment rebate, capped at HK$20,000 for the year of assessment 2015/16 final tax payable
- Increase the basic allowance and the single parent allowance from HK$120,000 to HK$132,000
- Increase the married person's allowance from HK$240,000 to HK$264,000
- Increase the allowances for maintaining a dependent parent or grandparent as follows:
a) increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from HK$40,000 to HK$46,000, with the same increase applying to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year
b) increasing the allowance for maintaining a dependent parent or grandparent aged between 55 and 59 from HK$20,000 to HK$23,000, with the same increase applying to the additional allowance for taxpayers residing with these parents or grandparents continuously throughout the year
c) raising the deduction ceiling for elderly residential care expenses from HK$80,000 to HK$92,000 for taxpayers whose parents or grandparents are admitted to residential care homes
Status of legal changes to promote financial services
- Introduced a bill into LegCo to allow, under specified conditions, interest deductions under profits tax for intra-group financing business of corporations and reduce profits tax of qualifying corporate treasury centres by 50 per cent
- Submitted a bill into LegCo in January 2016 to provide a legal framework for introducing an open-ended fund company structure to further diversify the fund domiciliation platform in Hong Kong
Short-term measures
To launch the following targeted support measures to support tourism:
- Waive the licence fees for 1,800 travel agents for one year
- Waive the licence fees for 2,000 hotels and guesthouses for one year
- Waive the licence fees for restaurants and hawkers and fees for restricted food permits for one year
Other relief measures
- Waive the rates for four quarters of 2016/17, subject to a cap of HK$1,000 per quarter for each rateable property
- Waive business registration fees for 2016/17
- Provide one month extra allowance to recipients of Comprehensive Social Security Assistance (CSSA), Old Age Allowance, Old Age Living Allowance and Disability Allowance
- Issue iBond of up to HK$10 billion with a maturity of three years, with interest payable to bond holders once every six months at a rate linked to the inflation rates of the last half-year period
- Launch a pilot scheme to issue Silver Bond this year and next year, targeting at Hong Kong residents aged 65 or above, with a maturity of three years for the first issuance
Bilingual version
Salaries Tax
Progressive Tax Rates (remain unchanged)
2015/16 and 2016/17 |
|
Net chargeable income |
Marginal tax rate |
First HK$40,000 |
2% |
Next HK$40,000 |
7% |
Next HK$40,000 |
12% |
Remainder |
17% |
Standard Rate (remain unchanged)
2015/16 and 2016/17 |
15% |
Allowances and Deductions
|
2015/16 (HK$) |
2016/17 (HK$)1 |
Personal Allowances: |
|
|
Basic |
120,000 |
132,000 |
Married |
240,000 |
264,000 |
Single parent |
120,000 |
132,000 |
Child: |
|
|
1st to 9th child |
|
|
Year of birth |
200,000 |
200,000 |
Other years |
100,000 |
100,000 |
Dependent parent/grandparent (aged 60 or above): |
|
|
Basic |
40,000 |
46,000 |
Additional allowance |
40,000 |
46,000 |
Dependent parent/grandparent (aged between 55-59): |
|
|
Basic |
20,000 |
23,000 |
Additional allowance |
20,000 |
23,000 |
Dependent brother/sister |
33,000 |
33,000 |
Disabled dependent |
66,000 |
66,000 |
|
|
|
Deductions (maximum amount): |
|
|
Self-education expenses |
80,000 |
80,000 |
Home loan interest |
100,000 |
100,000 |
Elderly residential care expenses |
80,000 |
92,000 |
Contributions to recognised retirement schemes |
18,000 |
18,000 |
Approved charitable donations |
35% of income |
35% of income |
One-off Measure on Salaries Tax and Tax under Personal Assessment
Reduction of 75% of final tax payable under Salaries Tax and Tax under Personal Assessment for 2015/16, subject to a ceiling of HK$20,000, is proposed.1
Profits Tax (Remain unchanged)
|
2015/16 and 2016/17 |
|
Tax rate |
Incorporated |
16.5% |
Unincorporated |
15% |
One-off Measure on Profits Tax1
Reduction of 75% of final tax payable under Profits Tax for 2015/16, subject to a ceiling of HK$20,000 is proposed.
Property Tax (Remain unchanged)
2015/16 and 2016/17 |
Tax rate |
15% |
Rates1
The Budget would waive rates for four quarters of 2016/17, subject to a ceiling of HK$1,000 per quarter for each rateable tenement.
Note 1: Legislative amendments are required.