2017/18 Hong Kong Budget Highlights

Major Proposals

Tax Policy Unit

• To set up a tax policy unit within the Financial Services and the Treasury Bureau to align Hong Kong tax practices with international standards; actively study ways to foster the development of pillar industries, industries over which Hong Kong has advantages and emerging industries through tax measures including enhanced deductions for innovation & technology expenditure; and explore broadening the tax base and increasing revenue.

Tax Relief

• 75% rebate, capped at HK$20,000 of 2016/17 final profits tax payable

• 75% rebate, capped at HK$20,000 of 2016/17 final salaries tax payable and tax under personal assessment

• Widen the marginal bands for salaries tax from the current HK$40,000 to HK$45,000. We expect it will also apply to tax under personal assessment

• Increase the disabled dependant allowance from HK$66,000 to HK$75,000

• Increase the dependent brother/sister allowance from HK$33,000 to HK$37,500

• Extend the entitlement period for the tax reduction for home loan interest deduction from 15 to 20 years while maintaining the current deduction ceiling of HK$100,000 per year

• Increase the deduction ceiling for self-education expenses from the current HK$80,000 to HK$100,000

• Waive rates for four quarters of 2017/18, subject to a ceiling of HK$1,000 per quarter for each rateable tenement

• Provide tax deduction for the purchase of regulated health insurance products, details of which are being examined by the Government
  

Measures to support business growth and industry development

• To introduce tax concession to promote aircraft leasing and financing business; a bill will be introduced into the Legislative Council in 2017 to amend the Inland Revenue Ordinance

• To extend the profits tax exemption to onshore privately-offered open-ended fund companies so as to attract more funds to domicile in Hong Kong

• To strengthen Hong Kong's status as the global offshore RMB business hub, further explore ways to open up more channels for two-way cross-border RMB fund flows with the Mainland authorities

• To support Small and Medium Enterprises:
  
  • Extend the application period for the Dedicated Fund on Branding, Upgrading and Domestic Sales for five years to June 2022 to assist Hong Kong enterprises in furthering their business development in the Mainland;
  • Extend the application period for the special concessionary measures under the SME Financing Guarantee Scheme to 28 February 2018 to help enterprises tide over their liquidity needs; and
  • Propose to strengthen the underwriting capacity of the Hong Kong Export Credit Insurance Corporation (ECIC) by raising the cap on the contingent liability of ECIC under contracts of insurance from HK$40 billion to HK$55 billion
    
• To launch the following measures to support the tourist industry:
  
  • 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
    

International Tax Co-operation

• To sign trade agreements with various economies as a separate customs territory, and continuously to expand its Free Trade Agreement (FTA) and Investment Promotion and Protection Agreement (IPPA) networks

• To join the inclusive framework set up by the international community for implementing the "base erosion and profit shifting" (BEPS) package

• To expand the network of Comprehensive Avoidance of Double Taxation Agreements (CDTAs) with other jurisdictions continuously
  

Other relief measures

• Provide one month extra allowance to recipients of Comprehensive Social Security Assistance (CSSA), Old Age Allowance, Old Age Living Allowance and Disability Allowance

• Similar arrangements will apply to Low-income Working Family Allowance (LIFA) and Work Incentive Transport Subsidy

• Lower the eligibility age for Elderly Health Care Vouchers from 70 to 65

• Launch 2nd scheme to issue Silver Bond for 2017/18 with appropriate issuance terms, including the issuance size and tenure, which will be formulated in the light of market environment

• First Registration Tax of electric commercial vehicles, motor cycles and motor tricycles will continue to be fully waived from 1 April 2017 to 31 March 2018; and the First Registration Tax waiver for electric private cars will be capped at HK$97,500

Salaries Tax

Progressive Tax Rates

Standard Rate (Remain unchanged)

Allowances and Deductions

Profits Tax (Remain unchanged)

Property Tax (Remain unchanged)

Note¹: Legislative amendments are required.

Related Links

• Hong Kong SAR Budget 2017/2018