The Financial Secretary of Hong Kong delivered the 2024-2025 Budget on 28 February 2024, which includes a series of proposed measures to boost the development of the economy.1
In this GMS Flash Alert, we highlight some of the key tax measures announced impacting individuals and their employers, amongst which, changes to Salaries Tax and tax under personal assessment, Profits Tax, and Stamp Duty.
WHY THIS MATTERS
The proposed relief measures for 2024-2025 and tax reduction for 2023-2024 may affect the tax payable by employees in Hong Kong. Key proposals that affect individuals and their employers include implementing a two-tiered standard rates regime for Salaries Tax and tax under personal assessment starting from the year of assessment 2024-2025 and a reduction of the 2023-2024 Salaries Tax and tax under personal assessment by 100 percent, subject to a ceiling of HKD 3,000.
Once they come into effect, the proposals may also necessitate adjustments to tax clearance returns already filed for 2023-2024 and hypothetical tax calculations for 2024-2025.
In Summary
In the Hong Kong Budget 2024-25, the government projected the fourth fiscal deficit in five years. However, despite this, Hong Kong’s fiscal reserves remain healthy at an estimated HKD 733.2 billion as of 31 March 2024.
Key proposals affecting individuals and their employers are noted below.
Salaries Tax and Tax under Personal Assessment
— Implement a two-tiered standard rates regime for Salaries Tax and tax under personal assessment starting from the year of assessment 2024-25. In the calculation for taxpayers whose net income exceeds HKD 5 million and whose Salaries Tax and tax under personal assessment are to be charged under the standard rate, the first HKD 5 million of net income remains taxed at 15 percent, while the portion of net income exceeding HKD 5 million will be taxed at 16 percent.
Net income |
Standard rate |
|
15% |
|
16%
|
Source: KPMG in Hong Kong
— A reduction of 2023-24 Salaries Tax and tax under personal assessment by 100 percent, subject to a ceiling of HKD 3,000.
Profits Tax and Stamp Duty
— A reduction of 2023-24 Profits Tax payable by 100 percent, subject to a ceiling of HKD 3,000.
— Cancelling all demand-side management measures including Special Stamp Duty, Buyer’s Stamp Duty, and New Residential Stamp Duty for any residential property transactions starting from 28 February 2024.
— Waived stamp duties on real estate investment trust (REIT) units and jobbing business of option market-makers.
Other Measures
— Resume the collection of Hotel Accommodation Tax at a rate of 3 percent starting from 1 January 2025.
— Implement progressive rating system for domestic properties starting from fourth quarter of 2024-25.
— Waived rates for non-domestic and domestic properties for the first quarter of 2024-25 – cap at HKD 1,000 in for each rateable property.
— Enhance various schemes to travel for talent – in the past year or so, more than 140,000 applications were approved via various talent admission schemes, where 100,000 of them already arrived in Hong Kong. The government will review the Top Talent Pass Scheme (TTPS) to attract talent mid-2024 and organise a Global Talent Summit and the Guangdong-Hong Kong-Macao Greater Bay Area High-quality Talent Development Conference in May.
KPMG INSIGHTS
This year’s Budget provides a range of measures aimed to maintain Hong Kong’s competitiveness in the short- to medium-term.
Targeted measures have been proposed to attract businesses and talents to Hong Kong while supporting local companies and livelihoods to support the city’s sustainable growth. The cancellation of stamp duties on residential properties and enhancement in immigration schemes could result in a boost for transactions in the real estate sector, but also could attract a wider talent pool to Hong Kong.
For a full analysis of the Budget, see “Hong Kong Budget Summary 2024-2025,” a publication of the KPMG International member firm in Hong Kong; also visit the Hong Kong member firm’s dedicated Budget webpage.
Legislative proposals do not generally become law until their enactment and may be modified before enactment.
FOOTNOTE
1 For the text of the Budget speech (in Mandarin/Chinese and English), and related documentation and videos, see: https://www.budget.gov.hk/2024/eng/index.html .
HKD 1 = USD 0.127
HKD 1 = CNY 0.92
HKD 1 = GBP 0.10
HKD 1 = EUR 0.118
HKD 1 = CAD 0.174
HKD 1 = AUD 0.19
Source: www.xe.com
The information contained in this newsletter was submitted by the KPMG International member firm in Hong Kong.
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