Tax summary

Profits Tax

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

Tax rates
	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

Capital allowances
Depreciation allowances for plant and machinery - Initial allowance - Annual allowance	60% 10%, 20% or 30%
Industrial building allowances - Initial allowance - Annual allowance	20% 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

The tax charge for Salaries Tax is the lower of the:

a. Net assessable income less charitable donations and allowable deductions at the standard rate (15%); or

b. 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	130,000	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 of immovable properties**
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

**Sale and purchase of Hong Kong stock**
Tax rate
0.26% of the consideration or the market value of the stock as at the transfer date – whichever is higher

Sale or transfer of immovable properties

Ad valorem stamp duty

Property consideration
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)

Special stamp duty on disposal of residential properties
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%^#

Buyer’s stamp duty on acquisition of residential properties
	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%