Insights

2015/16 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 2014/15 final tax payable
  • 75% salaries tax and tax under personal assessment rebate, capped at HK$20,000 for the year of assessment 2014/15 final tax payable
  • Increase basic and additional child allowances from HK$70,000 to HK$100,000

Proposed Amendments of Inland Revenue Ordinance (IRO)

  • Allow private equity funds to enjoy profits tax exemption available to offshore funds.  Formulate legislative proposals to provide the legal framework for introducing an open-ended fund company structure
  • Review the requirements under the IRO for interest deductions under profits tax for corporate treasury centres and reduce profits tax for specified treasury activities by 50 per cent
  • Consider extending the scope to cover more types of Intellectual Property (IP) rights regarding the tax deduction for capital expenditure incurred on the purchase of IP rights

Short-term measures

To launch the following targeted support measures to the sectors affected by the Occupy movement –

  • Waive the licence fees for 1,800 travel agents for six months
  • Waive the licence fees for 2,000 hotels and guesthouses for six months
  • Waive the licence fees for restaurants and hawkers and fees for restricted food permits for six months
  • Waive the fees for vehicle examination once for the renewal of vehicle licences of taxis, light buses, franchised and non-franchised buses, goods vehicles, trailers and special purpose vehicles within a year

Other relief measures

  • Waive the rates for the first two quarters of 2015/16, subject to a cap of HK$2,500 per quarter for each rateable property;
  • Provide an extra allowance to Comprehensive Social Security Assistance (CSSA) recipients, equal to two month of the standard rate CSSA payments, and an extra allowance to Old Age Allowance, Old Age Living Allowance and Disability Allowance recipients, equal to two-month allowances
  • Pay one month's rent for lower income tenants living in the rental units of the Hong Kong Housing Authority (HKHA) and the Hong Kong Housing Society (HKHS).  This measure will not apply to tenants who are required to pay additional rent to HKHA and non-elderly tenants of the HKHS Group B estates
  • 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

Salaries Tax

Progressive Tax Rates (remain unchanged)

Standard Rate (remain unchanged)

Allowances and Deductions

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 2014/15, subject to a ceiling of HK$20,000, is proposed.1

Profits Tax (Remain unchanged)

One-off Measure on Profits Tax1

Reduction of 75% of final tax payable under Profits Tax for 2014/15, subject to a ceiling of HK$20,000 is proposed.

Property Tax (Remain unchanged)

Rates1

The Budget would waive rates for first two quarters of 2015/16, subject to a ceiling of HK$2,500 per quarter for each rateable tenement.

Note 1: Legislative amendments are required.

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