Tax measures proposed in 2023-24 Budget
In his Budget delivered today (February 22), the Financial Secretary proposed the following tax measures.
The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100 per cent, subject to a ceiling of $6,000 per case. This measure will cost the Government $9.2 billion, benefitting 1.9 million taxpayers liable to salaries tax and tax under personal assessment and 134 000 businesses.
The tax reduction will reduce the amount of tax payable by taxpayers for the year of assessment 2022/23. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2022/23 as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment.
The proposed tax reduction will only be applicable to the final tax for the year of assessment 2022/23, but not to the provisional tax of the same year. Therefore, taxpayers are still required to pay the provisional tax on time as stipulated in the demand notes that have been issued to them. The provisional tax paid will, in accordance with the Inland Revenue Ordinance, be applied in payment of the final tax for the year of assessment 2022/23 and provisional tax for the year of assessment 2023/24. The excess balance, if any, will be refunded.
The proposed tax reduction is not applicable to property tax. Nevertheless, individuals with rental income, if eligible for personal assessment, may be able to enjoy such a reduction under personal assessment.
A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy a tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he or she would get if he or she was not assessed under personal assessment. The exact amount will need to be evaluated case by case. Individuals having business profits or rental income may elect for personal assessment in their tax returns for the year of assessment 2022/23.
In addition to the one-off tax reduction, the Financial Secretary proposed to increase child allowance effective from the year of assessment 2023/24. The basic child allowance for each child and the additional child allowance for each child born during the year of assessment will both increase from the current $120,000 to $130,000.
On profits tax, the Financial Secretary proposed to provide tax deduction for the spectrum utilisation fees to be paid by the future successful bidders of radio spectrum. Besides, he proposed to increase the tax deduction for the Mandatory Provident Fund voluntary contributions made by employers for their employees aged 65 or above from the current 100 per cent to 200 per cent.
On betting duty, the Financial Secretary proposed to impose an annual special football betting duty of $2.4 billion on the Hong Kong Jockey Club under the Betting Duty Ordinance (Cap. 108) for 5 years starting from 2023-24 while the current betting duty rates remain unchanged.
The above measures will be implemented upon completion of the relevant legislative procedures.
In respect of stamp duty, the Financial Secretary proposed to adjust the value bands on which the ad valorem stamp duty at Scale 2 rates apply. The new value bands will be applicable to any conveyance on sale or agreement for sale of residential or non-residential property transaction executed at 11 am today or thereafter that is subject to the ad valorem stamp duty at Scale 2 rates. The Government will introduce the Stamp Duty (Amendment) Bill 2023 (the Bill) into the Legislative Council to take forward the proposed adjustment. To enable property purchasers to benefit from the measure as soon as possible, the Chief Executive has made the Public Revenue Protection (Stamp Duty) Order 2023 under the Public Revenue Protection Ordinance (Cap. 120) to give full force and effect of law to the Bill before its enactment.
Details of the above proposed tax measures and examples of tax calculations are available on the website of the Inland Revenue Department (www.ird.gov.hk) for the public’s reference. They can also be obtained through the fax hotline 2598 6001.