Hong Kong will grant taxpayers a waiver of up to HKD10,000 (USD1,290) of profits tax, salaries tax, and tax under personal assessment, the territory announced in its 2021-22 Budget.
The Budget announces a one-off 100-percent reduction of profits tax, salaries tax, and tax under personal assessment for the year of assessment 2020-21, subject to a ceiling of HKD10,000 per case.
The tax reduction is not applicable to property tax. However, individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.
Hong Kong’s Inland Revenue Department (IRD) has set out how the waiver would operate, as follows:
- In the case of profits tax, the ceiling will be applied to each business.
- For salaries tax, the ceiling will be applied to each taxpayer, except married couples that are jointly assessed.
- For personal assessment, the ceiling will be applied to each single taxpayer or married person who elects for personal assessment separately from their spouse.
- A taxpayer who is separately chargeable to salaries tax and profits tax would be able to benefit from a tax reduction under each of the tax types.
- For a taxpayer that has business profits or rental income and who elects for personal assessment, the reduction would be based on the tax payable under personal assessment.
The IRD said that taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2020-21 as usual. Upon enactment of the relevant legislation, the IRD will effect the reduction in the final assessment.
The Budget further includes a waiver of business registration fees for 2021-22 and an increase to the rate of ad valorem stamp duty from 0.1 percent to 0.13 percent of the consideration or value of each transaction of Hong Kong stock, payable by buyers and sellers.