The Hong Kong Government released its 2022-2023 budget on February 23rd

Fidinam Hong Kong News

The following concessionary measures will be submitted to the legislative council for implementation:

  1. Reducing profit tax, salaries tax and tax under personal assessment for the Year of Assessment 2021/2022
  2. Waiving business registration fees for the year 2022-2023
  3. Introducing a tax deduction for domestic rental expenses
  4. Consumption vouchers

 

1. Reducing profit tax, salaries tax and tax under personal assessment for the Year of Assessment 2021/2022


A one-off 100% reduction on profits tax, salaries tax, and tax under personal assessment for the year 2021/2022, subject to a HK$10,000 ceiling per case.

  1. For profits tax, the ceiling is applicable to each business
  2. For salaries tax, the ceiling is applicable to each individual taxpayer, however jointly assessed married couples, the ceiling is applicable to each married couple
  3. For personal assessment, the ceiling is applicable to each taxpayer or a married person who chooses the personal assessment separately from his/her spouse. Otherwise, if the couple elects personal assessment jointly, the tax reduction ceiling is capped at HK$10,000 for the couple.

Exceptions:

  • Property tax: the tax reduction does not apply to property tax, however individuals with rental income, if eligible for personal assessment may be able to enjoy such tax reduction

A taxpayer who is separately subject to salary tax and profit tax can enjoy a tax reduction for each tax type. If a taxpayer has business profits or rental income and chooses the personal assessment, the tax reduction will then be based on the tax payable under personal assessment.

To apply to personal assessment, eligible taxpayers should fill out Part 7 of their tax return form (BIR60) for the year 2021/2022. Individual taxpayers not having income derived from business profit or rental need and therefore only have income derived from salary do not require to elect for personal assessment.

Taxpayers should file their profit tax returns and tax returns for 2021/2022 as usual. When enacted, the Inland Revenue Department will apply the legislation and effect the reduction on the final assessment. If assessments are submitted before the enactment, the Inland Revenue Department will reassess.

The tax reduction legislation only applies to the final tax for 2021/2022 and not to provisional tax for 2022/23, therefore taxpayers are required to pay their 2022/23 provisional taxes as usual.

 

2. Waiving business registration fees for 2022-2023


The Financial Secretary proposed to renounce Business Registration fees for the year 2022-2023, from 1 April 2022 to 31 March 2023.

 

3. Introducing a tax deduction for domestic rental expenses

A tax deduction for domestic rental expenses for the year 2022/2023 is introduced. Taxpayers liable to salaries tax or tax charge under personal assessment who do not own any domestic property can claim a deduction for the rent paid by him/her or his/her spouse as the tenant. The annual ceiling of the deduction is HK$100,000 for each year of assessment without limit for the entitlement period.

  1. Eligible people
    • Taxpayers liable to salaries tax and tax charged under personal assessment
    • Deduction is also allowed to a taxpayer in respect of a tenancy agreement entered into by his/her co-habiting spouse

  2. Non-eligible people
    • Taxpayer owning any domestic property
    • Landlord of the rented property is an associate of the taxpayer (for example spouse, parent, family, or a corporation controlled by the taxpayer)
    • Taxpayer with a place of residence provided by his/her employer (including taxpayer receiving a refund for their rent)

  3. Eligible properties
    • The rented private property is the taxpayer’s Hong Kong principal residence
    • The rented private property has a stamped tenancy agreement

  4. Non-eligible properties
    • Rented private properties that are not domestic properties
    • Domestic property rented under a lease-purchase agreement

  5. Notes
    • Deduction is only permitted on rental expenses already paid
    • If there are multiple tenants under the tenancy agreement: the ceiling of the deduction is reduced proportionally to the number of co-tenants
    • If the tenancy period falling within the year of assessment is less than 12 months, the deduction ceiling will be proportional to the tenancy period

4. Electronic Consumption Vouchers


Electronic consumption vouchers worth HK$10,000 will be issued to each eligible Hong Kong permanent resident and new arrival aged 18 or above.

  • Previously registered persons: HK$5,000 consumption vouchers will be issued in April, remaining HK$5,000 vouchers will be issued in mid-year by instalment
  • Newly eligible persons: after successful registration, HK$10,000 vouchers will be issued in mid-year by instalment

 

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