Tax Insights

Hong Kong 2019-20 Budget – Tax Highlights

Wednesday 27th February 2019: New personal and corporate tax incentives are among the measures announced in the Annual Budget issued by Financial Secretary Paul Chan earlier today.

They come in the form of a proposed one-off tax rebate of 75% or HK$20,000, whichever is lower, for salaries tax, tax under personal assessment and profits tax. The rebates will be applied to tax levied for the current financial year, 2018-19.

Mr Chan also proposed a waiver on Business Registration fees for 2019-2020, benefitting 1.4 million Hong Kong-registered business currently facing an annual cost of HK$2,250.

The Financial Secretary said the Budget placed emphasis on stabilising the economy, supporting enterprises, safeguarding jobs and strengthening livelihoods.

The proposed tax changes are as follows:

I. Salaries Tax / Personal Assessment

  • No change to allowances and deductions was proposed, following substantial changes introduced in the 2018-19 budget.

    A summary of the allowances and deductions for 2019/20 is shown as below:

    Allowances 2018/19 onwards
    HK$
    Basic Allowance 132,000
    Married Person Allowance 264,000
    Single Parent Allowance 132,000
    Child Allowance 120,000
    For each child born during the year 120,000
    Dependent Brother or Dependent Sister Allowance 37,500
    Dependant Parent and Dependant Grandparent Allowance
    • for aged 60 or above or eligible to claim allowance under the Disability Allowance Scheme
    • for those aged 55 to 59


    50,000

    25,000
    Additional Dependant Parent and Dependant Grandparent Allowance
    • for aged 60 or above or eligible to claim allowance under the Disability Allowance Scheme
    • for those aged 55 to 59


    50,000

    25,000
    Disabled Dependant Allowance 75,000
    Personal disability allowance 75,000

    Deductions 2018/19 onwards
    HK$
    Expenses of self-education 100,000
    MPF Contribution 18,000
    Home Loan Interest 100,000; 20 Years
    Elderly Residential Care 100,000
    Approved Charitable Donations 35% of income after deductions

II. Marginal bands for salaries tax

  • No change is proposed. Tax Bands for salaries tax from year of assessment 2018/19 onwards are as follows:

    Income HK$ Progressive tax rate Progressive tax applicable to the band HK$
    0-50,000 2% 1,000
    50,001-100,000 6% 3,000
    100,001-150,000 10% 5,000
    150,001-200,000 14% 7,000
    200,001 and over 17%

III. One-Off Tax Rebate

  • An one-off 75% tax rebate or HK$20,000 (whichever is lower) on 2018/19 Salaries Tax, Personal Assessment and Profits Tax has been proposed. The rebate will be deducted from the 2018/19 final tax (i.e. after the 2018/19 Individual Income Tax Return is filed).

  • IV. Other tax concessions

    The Financial Secretary also noted the following:

    • The Government will consider introducing a more competitive tax arrangement to attract private equity funds to set up and operate in Hong Kong.
    • Starting from 1 April 2019, different types of onshore and offshore funds meeting certain conditions will be eligible for profits tax exemption.
    • The Government will propose legislative amendments to provide a 50 per cent profits tax concession to eligible insurance businesses including the marine insurance industry.
    • The Government is actively expanding the network of Comprehensive Avoidance of Double Taxation Agreements (CDTAs) to enhance Hong Kong’s business environment and to attract investment. While Hong Kong has already signed CDTAs with 40 tax jurisdictions, the Government targets to bring the total number of Hong Kong’s CDTAs to 50 in the next few years.
    • The Government has commissioned the Hong Kong Maritime and Port Board to set up a dedicated task force to study tax and other measures, with a view to attracting ship finance companies establishing their presence in Hong Kong and developing Hong Kong as a ship leasing centre in the Asia-Pacific region.

    • V. Property Owners

      • Although there will be no tax concession on property tax, property owners will enjoy waiver of rates for all four quarters in 2019/20, subject to a ceiling of HK$1,500 per quarter for each rateable tenement.

      • VI. Miscellaneous measures for supporting enterprises

        • The special concessionary measures under the SME Financing Guarantee Scheme operated by the HKMC Insurance Limited are enhanced by reducing the guarantee fee rates by 50 per cent, increasing the maximum loan amount to HK$15 million, and lengthening the maximum loan guarantee period to seven years. The application period of the special concessionary measures is extended to 30 June 2020.
        • Technology Voucher Programme and rolling out enhancement measures are regularised, including doubling the funding ceiling for each enterprise from HK$200,000 to HK$400,000 to encourage the wider adoption of technology by local enterprises to improve their efficiency and services.

        • VII. Miscellaneous measures for relieving people’s burden

          • Provide social security recipients an allowance equivalent to one month of the standard rate Comprehensive Social Security Assistance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance.
          • Provide an one-off grant of HK$2,500 of support learning to each student in need.
          • Pay the examination fees for school candidates sitting for the 2020 Hong Kong Diploma of Secondary Education Examination.
          • Providing, on a one-off basis, an additional HK$1,000 worth of voucher to the elderly eligible for the Elderly Health Care Voucher Scheme.
          • We trust you will find the above useful information. Should you have any questions, please do not hesitate to contact us on (852) 3705 0095 or [email protected].