Wednesday 24th February 2021: New personal and corporate tax incentives are among the measures announced in the Annual Budget issued by Financial Secretary Mr. Paul Chan earlier today.
They come in the form of a proposed one-off tax rebate of 100% or HK$10,000, 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, 2020-21. IT WILL BE deducted from the 2020/21 final tax assessment after 2020/21 Individual Income Tax Returns and Profits Tax Returns are filed.
Mr. Chan proposed a waiver on Business Registration fees for 2021-2022, benefitting 1.5 million Hong Kong-registered business currently facing an annual cost of HK$2,250.
The Financial Secretary said the Budget placed emphasis on riding out the storm arisen from epidemic by supporting enterprises and employment, stimulating the economy, relieving people's hardship and building a liveable city.
The Financial Secretary addressed several tax related measures in the Budget including raising the rate of Stamp Duty on Stock Transfers. While the Financial Secretary stated that the Government revenue is susceptible to changes in the economic environment due to the relatively narrow tax base, he reiterated that it is neither the appropriate time to revise rates of profits tax and salaries tax nor the appropriate time to introduce new taxes. We expect that the Government will continue reviewing the tax rates and carrying out research on new taxes and make preparation for discussion and consensus-building at a suitable time.
The highlights of the Budget are as follows:
No change to allowances and deductions was proposed.
A summary of the allowances and deductions for 2020/21 and 2021/22 is shown as below:
Allowances | 2020/21 HK$ |
2011/22 HK$ |
Basic Allowance | 132,000 | 132,000 |
Married Person Allowance | 264,000 | 264,000 |
Single Parent Allowance | 132,000 | 132,000 |
Child Allowance | 120,000 | 120,000 |
For each child born during the year | 120,000 | 120,000 |
Dependent Brother or Dependent Sister Allowance | 37,500 | 37,500 |
Dependant Parent and Dependant Grandparent Allowance
|
50,000 25,000 |
50,000 25,000 |
Additional Dependant Parent and Dependant Grandparent Allowance
|
50,000 25,000 |
50,000 25,000 |
Disabled Dependant Allowance | 75,000 | 75,000 |
Personal disability allowance | 75,000 | 75,000 |
Deductions | 2020/21 HK$ |
2021/22 HK$ |
Expenses of self-education | 100,000 | 100,000 |
MPF Contribution | 18,000 | 18,000 |
Home Loan Interest | 100,000; 20 Years | 100,000; 20 Years |
Elderly Residential Care | 100,000 | 100,000 |
Approved Charitable Donations | 35% of income after deductions | 35% of income after deductions |
Voluntary Health Insurance Scheme | 8,000 | 8,000 |
Annuity Premiums and MPF Voluntary Contributions | 60,000 | 60,000 |
No change is proposed. Tax Bands for salaries tax from year of assessment 2021/22 onwards are as follows:
TAXABLE 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% |
The Financial Secretary also noted the following:
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].