HONG KONG tax updates – 2018/19 budget announced by financial secretary

Hong Kong’s 2018/19 budget offers a 75% tax reduction (capped at HK$30,000) for 2017/18 and adjusts marginal tax bands for 2018/19. Learn how these changes could benefit individuals and businesses.

News

March 9, 2018

min read

The Hong Kong Financial Secretary announced his 2018/19 budget on 28 February 2018.We are pleased to share with you some key points:

1. Reduce profits tax, salaries tax and tax under personal assessment for the year of assessment 2017/18 by 75%, capped at HK$30,000

Ceiling of HK$30,000 is applied to the tax reduction. As shown in the Profits Tax scenario analysis below, Example 2 illustrates if a company generates net assessable profits of HK$242,435 for the year of assessment 2017/18, it will be able to fully utilize the tax reduction.
Annex

Schedule 3 countries and territories with equivalent legislation

| (ignore cents) in HKD | Example 1 | Example 2 | Example 3 | | | :--- | :--- | :--- | :--- | :--- | | Net assessable profits (after set off with tax loss brought forward) | 242,436 | 242,435 | 242,424 | A | | Tax at prevailing rate of 16.5% | 40,002 | 40,001 | 39,999 | B = A*16.5% | | Tax reduction calculated at 75% | 30,001 | 30,000 | 29,999 | C1 = B*75% | | Tax reduction capped at HK$30,000 | 30,000 | | | C2 | | Analysis results | Not fully enjoy 75% tax reduction due to the ceiling of HK$30,000 | Fully utilize tax reduction | Not fully utilize tax reduction of HK$30,000 | |

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2. Widen the marginal bands and adjust the marginal tax rates for salaries tax for the year of assessment 2018/19

From the table below, if an individual taxpayer having net chargeable income covering all the marginal bands (i.e. exceed HK$200,000) for the year of assessment 2018/19, his tax saving will be at least HK$6,550 (being HK$16,000 -HK$9,450).

| 2017/18 | | | 2018/19 | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Net chargeable income | % | Tax thereon | Net chargeable income | % | Tax thereon | | 45,000 | 2 | 900 | 50,000 | 2 | 1,000 | | 45,000 | 7 | 3,150 | 50,000 | 6 | 3,000 | | 45,000 | 12 | 5,400 | 50,000 | 10 | 5,000 | | 135,000 | | 9,450 | 50,000 | 14 | 7,000 | | | | | 200,000 | | 16,000 | | Remaining | 17 | | | 17 | |

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* Net chargeable income = Assessable income after deductions and allowances

For further details, please contact your Portcullis Relationship Manager or Ms Pisces Wong, Senior Accounts and Tax Manager at:-

Portcullis (Hong Kong) Limited
Tel:+852 3173 1046
Email: Pisces.Wong@portcullis.co

Disclaimer: This Newsletter is published by Portcullis (Hong Kong) Limited, whose registered office is at 15/F, BOC Group Life Assurance Tower, No. 136 Des Voeux Road Central, Central, Hong Kong. This Newsletter does not constitute and is not to be construed as the provision of legal, investment or tax advice or as an invitation or solicitation to make any investment. Readers should not act in reliance on any statement contained in this publication without first obtaining appropriate professional advice.