Profits Tax
Key highlights
- No changes proposed to tax rates
Reduction of 100% in Profits Tax payable for 2022-23, subject to a ceiling of HKD6,000 - To provide tax deduction for the spectrum utilisation fees to be paid by the telecommunications network operators which successfully bid for radio spectrum
- To enhance the aircraft leasing preferential tax regime by allowing tax deduction for the acquisition cost of aircraft and expanding the scope of leases and aircraft leasing activities
- To introduce a “patent box” tax incentive to provide tax concessions for profits sourced in Hong Kong from qualifying patents generated through R&D activities to encourage the I&T sector to create more patented inventions with market potential
- To apply the global minimum effective tax rate on large multinational enterprise groups and implement the domestic minimum top-up tax starting from 2025 onwards
- To review the existing tax concession measures applicable to funds and carried interest
| Corporations | Unincorporated businesses | |
|---|---|---|
| Standard tax rate* | 16.5% | 15% |
Two-tiered Profits Tax rates regime Qualifying taxpayers may be taxed at the following rates: |
||
| - First HKD 2 million of assessable profits | 8.25% | 7.5% |
| - Remaining balance | 16.5% | 15% |
| Note: Only one entity within a group can benefit from the two-tiered rates |
* Concessionary regimes are available for certain specified industries or business activities.
Profits Tax on royalties paid to non-residents
When royalty payment is made to a non-resident associated person and the underlying intellectual property has once been owned by any Hong Kong taxpayer, the assessable profits of the non-resident associated person are deemed to be 100% of the payment (i.e. effective tax rate is 15% or 16.5%). In other cases, the assessable profits of the non-resident person are generally deemed to be 30% of the payment (i.e. effective tax rate is 4.5% or 4.95%). The effective tax rate may be reduced under the terms of the applicable double taxation agreement or election of the two-tiered Profits Tax rates.
No changes proposed in tax rates for 2023-2024
| Depreciation allowances for plant and machinery | |
| - Initial allowance | 60% |
| - Annual allowance | 10%, 20% or 30% |
| Industrial building allowances | |
| - Initial allowance | 20% |
| - Annual allowance | 4% |
| Commercial building allowance | 4% |
| Building refurbishment | 20% deduction for 5 years |
| Expenditure on computer hardware and software | 100% deduction |
| Expenditure on environmentally friendly machinery and equipment | 100% deduction |
| Enhanced tax deduction for qualifying research and development expenditure | 300% (for the first HKD 2 million) 200% (for the remaining balance) |
Source: Inland Revenue Ordinance
Salaries Tax
Key highlights
- Increase the basic child allowance and the additional child allowance for each child born from HKD120,000 to HKD130,000 starting from
2023-24 - Reduction of 100% in Salaries Tax payable for 2022-23, subject to a ceiling of HKD6,000
Tax rates
The tax charge for Salaries Tax is the lower of the:
- Net assessable income less charitable donations and allowable deductions at the standard rate (15%); or
- Net assessable income less charitable donations, allowable deductions and personal allowances, charged at the progressive rates below.
| 2016-2017 | Rate | HKD | 2017-2018 | Rate | HKD | 2018-2019 to 2023-2024 | Rate | HKD |
|---|---|---|---|---|---|---|---|---|
| First HKD 40,000 | 2% | 800 | First HKD 45,000 | 2% | 900 | First HKD 50,000 | 2% | 1,000 |
| Next HKD 40,000 | 7% | 2,800 | Next HKD 45,000 | 7% | 3,150 | Next HKD 50,000 | 6% | 3,000 |
| Next HKD 40,000 | 12% | 4,800 | Next HKD 45,000 | 12% | 5,400 | Next HKD 50,000 | 10% | 5,000 |
| Next HKD 50,000 | 14% | 7,000 | ||||||
| Remaining balance | 17% | 17% | 17% |
| Allowances for individuals | 2017-2018 HKD |
2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 HKD |
2023-2024 HKD |
|
|---|---|---|---|---|---|---|---|---|
| Personal allowances | Basic | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 |
| Married | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | |
| Single parent | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | |
| Disabled | - | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | |
| Child allowances | 1st to 9th child (each) | |||||||
| Year of birth | 200,000 | 240,000 | 240,000 | 240,000 | 240,000 | 240,000 | 260,000 | |
| Other years | 100,000 | 120,000 | 120,000 | 120,000 | 120,000 | 120,000 | 130,000 | |
| Dependent parent and grandparent allowances | ||||||||
| Aged 60 or above, or disabled | 46,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | |
| Aged between 55 and 59 | 23,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Additional dependent parent and grandparent allowances | ||||||||
| Aged 60 or above, or disabled | 46,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | |
| Aged between 55 and 59 | 23,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Disabled dependent (spouse/child/parent/grandparent/brother/sister) allowances | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | |
| Dependent brother/sister allowances | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | |
| Deductions – maximum limit | 2017-2018 HKD |
2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 HKD |
2023-2024 HKD |
|---|---|---|---|---|---|---|---|
| Self-education expenses | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Elderly residential care expenses | 92,000 | 100,000 | 100,000 |
100,000 |
100,000 | 100,000 | 100,000 |
| Mandatory contributions to recognised retirement schemes | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 |
| Home loan interest | 100,000 | ||||||
| Approved charitable donations | 35% of assessable income | ||||||
| Qualifying voluntary health insurance scheme policy premiums | - | - | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person |
| Annuity premiums and MPF voluntary contributions | - | - | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 |
| Domestic rents deduction | - | - | - | - | - | 100,000 | 100,000 |
Source: Inland Revenue Ordinance
Property Tax, Rates and Stamp Duty
Key highlights
- Rating System
A progressive rating system for domestic properties will be introduced in 2024-25 - Stamp Duty
Adjust value bands of the ad valorem stamp duty payable for sale and purchase or transfer of residential and non-residential properties - Property Tax
No changes proposed - Rates (domestic property)
Rates waiver for each domestic property for the first two quarters of 2023-24, subject to a ceiling of HKD 1,000 per quarter for each rateable property - Rates (non-domestic property)
Rates concession for each non-domestic property for the first 2 quarters of 2023-24, subject to a ceiling of HKD 1,000 per quarter for each rateable property
Stamp Duty
| Lease term | Rate |
|---|---|
| Not defined or is uncertain | 0.25% of the yearly or average yearly rent |
| Does not exceed 1 year | 0.25% of the total rent payable over the term of the lease |
| Exceeds 1 year but not exceeding 3 years | 0.5% of the yearly or average yearly rent |
| Exceeds 3 years | 1% of the yearly or average yearly rent |
| Tax rate |
|---|
0.26% of the consideration or the market value of the stock as at the transfer date – whichever is higher |
Sale on transfer of immovable properties
Ad valorem stamp duty
| Exceeds | Does not exceed | Flat rate (for residential properties) |
Scale 2 rates* (for non-residential properties) |
Scale 2 rates* (for Hong Kong permanent residents who do not own other residential properties and in other specified circumstances) |
|---|---|---|---|---|
| HKD 3,000,000 | 15% | HKD 100 | HKD 100 | |
| HKD 3,000,000 | HKD 4,500,000 | 1.5% | 1.5% | |
| HKD 4,500,000 | HKD 6,000,000 | 2.25% | 2.25% | |
| HKD 6,000,000 | HKD 9,000,000 | 3.0% | 3.0% | |
| HKD 9,000,000 | HKD 20,000,000 | 3.75% | 3.75% | |
| HKD 20,000,000 | 4.25% | 4.25% |
* Subject to marginal relief. Applicable to any instrument executed on or after 22 February 2023 for the sale and purchase or transfer of residential and non-residential property (subject to the enactment of the relevant amendment bill by the Legislative Council)
| Property holding period | Tax rate |
|---|---|
| 6 months or less | 20%# |
| More than 6 months but not exceeding 12 months | 15%# |
| More than 12 months but not exceeding 36 months | 10%# |
| Tax rate | |
|---|---|
| For non-permanent Hong Kong residents | 15%# |
# On the sales consideration or market value of property at the date of sale (whichever is higher)
Property Tax
| Tax rate | 15% |
The tax rate is applied to the “net assessable value” of the property which is calculated at the total rent receivable (net of rates) less 20% statutory allowance for repairs and outgoings.
Rates
| Tax rate | 5% |
The tax rate is applied to the “rateable value” which is the estimated annual rental value of the property at a designated valuation reference date. A progressive rating system for domestic properties will be introduced in 2024-25.
Proposed progressive rating system for domestic properties from 2024-25 onwards
| Annual rateable value (Equivalent monthly rental) |
Proposed rates |
|---|---|
| HKD 550,000 or below (monthly rental of HKD 45,833 or below) |
5% (unchanged) |
| HKD 550,001 - HKD 800,000 (monthly rental of around HKD 45,833 to HKD 66,667) |
First HKD 550,000: 5% Next HKD 250,000: 8% |
| Above HKD 800,000 (monthly rental of over HKD 66,667) |
First HKD 550,000: 5% Next HKD 250,000: 8% Above HKD 800,000: 12% |
Sources: Inland Revenue Ordinance, Stamp Duty Ordinance, Rating and Valuation Department’s website
