Hong Kong: Tax measures in 2023-2024 budget include “patent box,” global minimum tax starting in 2025

The 2023-2024 budget was presented to the Legislative Council

The 2023-2024 budget was presented to the Legislative Council

The financial secretary today presented the 2023-2024 budget to the Legislative Council.  

Income tax

The budget did not include any proposed changes to income tax rates, but it included the following proposed measures related to income tax:

  • 100% reduction in income tax payable for 2022-23, subject to a ceiling of HKD 6,000
  • Enhancement of 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
  • Tax deduction for the spectrum utilization fees to be paid by the telecommunications network operators that successfully bid for radio spectrum
  • Introduction of “patent box” tax incentive to provide tax concessions for profits sourced in Hong Kong from qualifying patents generated through research and development (R&D) activities to encourage the information technology (IT) sector to create more patented inventions with market potential
  • Application of the global minimum effective tax rate on large multinational enterprise groups and implement the domestic minimum top-up tax starting from 2025 onwards

Property and stamp tax

The budget included the following proposed measures related to property and stamp tax:

  • Rating system: Introduction of progressive rating system for domestic properties starting in 2024-25
  • Stamp tax: Adjustment of value bands of the ad valorem stamp tax payable under Scale 2 for sale and purchase or transfer of residential and nonresidential properties
  • Property tax 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
    • Non-domestic property: Rates concession for each non-domestic property for the first two quarters of 2023-24, subject to a ceiling of HKD 1,000 per quarter for each rateable property
  • Sale and purchase of Hong Kong stock: A rate of 0.26% of the consideration or the market value of the stock as at the transfer date (whichever is greater)


For more information, contact a KPMG tax professional:

David Ling | +1 609 874 4381 | davidxling@kpmg.com

 

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