Profits Tax
Key highlights
- No changes proposed to tax rates
- Reduction of 100% in Profits Tax payable for 2021-22, subject to a ceiling of HKD 10,000
- To provide tax concessions for the eligible family investmentmanagement entities managed by single-family offices
- To provide a 50% tax concession to attract eligible maritime enterprises to establish a presence in Hong Kong (including ship registration, ship finance and management, marine insurance, and maritime legal and arbitration service
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 reduced rates:
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*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 rate.
No changes proposed in tax rates for 2022-23
Capital allowances |
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|---|---|
Depreciation allowances for plant and machinery
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Industrial building allowances
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| 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
- Introduce tax deduction for domestic rental expenses, subject to a ceiling of HKD 100,000 starting from 2022-23
- Reduction of 100% in Salaries Tax payable for 2021-22, subject to a ceiling of HKD 10,000
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 | 2018-19 to 2022-23 |
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 |
2016-2017 HKD |
2017-2018 HKD |
2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 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 | |
| Child allowances | 1st to 9th child (each) | |||||||
| Year of birth | 200,000 | 200,000 | 240,000 | 240,000 | 240,000 | 240,000 | 240,000 | |
| Other years | 100,000 | 100,000 | 120,000 | 120,000 | 120,000 | 120,000 | 120,000 | |
| Dependent parent and grandparent allowances | Aged 60 or above | 46,000 | 46,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |
| Aged between 55 and 59 | 23,000 | 23,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Additional dependent parent and grandparent allowances | Aged 60 or above | 46,000 | 46,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |
| Aged between 55 and 59 | 23,000 | 23,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Disabled dependent (spouse/child/parent/ grandparent/brother/sister) allowances | 66,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | |
| Dependent brother/sister allowances | 33,000 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | |
Deductions – maximum limit |
2016-2017 HKD |
2017-2018 HKD |
2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 HKD |
|---|---|---|---|---|---|---|---|
| Self-education expenses | 80,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Elderly residential care expenses | 92,000 | 92,000 | 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 |
| Annuity premiums and MPF voluntary contributions | - | - | - | 60,000 | 60,000 | 60,000 | 60,000 |
Source: Inland Revenue Ordinance
Property Tax, Rates and Stamp Duty
Key highlights
- Rating System
Propose to revise the rating system by: (1) granting rates concession in a more targeted manner starting in 2023-24; and (2) introducing a progressive rating system for domestic properties starting in 2024-25 - Stamp Duty
No changes proposed - Property Tax
No changes proposed - Rates (domestic property)
Rates waiver for each domestic property for all 4 quarters of 2021-22, subject to a ceiling of HKD 1,500 per quarter in the first 2 quarters and HKD 1,000 per quarter in remaining 2 quarters - Rates (non-domestic property)
Rates waiver for each non-domestic property for all 4 quarters of 2021-22, subject to a ceiling of HKD 5,000 per quarter in the first 2 quarters and HKD 2,000 per quarter in the remaining 2 quarters
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 on transfer of immoveable properties
Ad valorem stamp duty
Property consideration |
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|---|---|---|---|---|
| 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 2,000,000 | 15% | HKD 100 | HKD 100 | |
| HKD 2,000,000 | HKD 3,000,000 | 1.5% | 1.5% | |
| HKD 3,000,000 | HKD 4,000,000 | 2.25% | 2.25% | |
| HKD 4,000,000 | HKD 6,000,000 | 3.0% | 3.0% | |
| HKD 5,000,000 | 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 26 November 2020 for the sale and purchase or transfer of 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-Hong Kong permanent 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 (Before 2024-05)
| 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. As there has been no major change since 1995, the Government will review the rating system for any improvement.
Proposed progressive rating system for domestic properties from 2024-25 onwards
| Annual rateable value (Equivalent monthly rental) |
Proposed rates |
|---|---|
| $550,000 or below (monthly rental of $45,833 or below) |
5% (unchanged) |
| $550,001-$800,000 (monthly rental of around $45,833 to $66,667) |
First $550,000: 5% Next $250,000: 8% |
| Above $800,000 (monthly rental of over $66,667) |
First $550,000: 5% Next $250,000: 8% Above $800,000: 12% |
Sources: Inland Revenue Ordinance, Stamp Duty Ordinance, Rating and Valuation Department’s website