The Government Welcomes the Passage of the Inland Revenue (Amendment)
The Legislative Council passed the Inland Revenue (Amendment) (Tax Concessions and Two-tiered Standard Rates) Bill on 22 May 2024, and the government applauded this development. The Bill implements the following measures that the government announced in the 2023 Policy Address and the 2024–25 Budget, including:
- putting into effect a two-tiered standard rates system for personal assessment taxes and salaries tax, beginning with the assessment year 2024–2025. The first $5 million of net income will continue to be subject to the standard rate of 15% for determining the amount of salaries tax or tax under personal assessment at standard rates, with the remainder over $5 million being subject to the standard rate of 16 percent;
- a 100% reduction in profits tax, personal assessment tax, and salaries tax for the assessment year 2023–2024, up to a maximum of $3,000 per case; and
- allowing, if certain requirements are met (such as the taxpayer residing in Hong Kong with their newborn child for a continuous period of at least six months, or a shorter period that the Commissioner of Inland Revenue deems reasonable in the circumstances), an additional deduction ceiling amount of $20,000 for home loan interest or domestic rents, on top of the basic deduction ceiling ($100,000). Up to 19 years of assessment, each taxpayer may be eligible for an additional deduction cap amount.
On May 31, 2024, the Bill as passed will be gazetted. The one-time tax breaks will be included in the ultimate tax that taxpayers must pay for the assessment year 2023–2024. Furthermore, the Inland Revenue Department will use the information provided by qualified taxpayers to ascertain the amounts of home loan interest and domestic rents that will be allowed in order to calculate the provisional salaries tax for the assessment year 2024–2025. The department will then apply the two-tiered standard rates accordingly.
