The Financial Secretary of Hong Kong announced his 2023-24 Budget on 22 February 2023. Our Fidinam Hong Kong team has highlighted a few measures for your information:
All the above measures can only be implemented after completion of the relevant legislative process. It should be stressed that details of the measures are subject to change during the legislative process.
Please note that there is no waiver of business registration fee for 2023-24 (i.e. from 1 April 2023 onwards).
The Financial Secretary has proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a maximum limit of HK$6,000 per case. This measure will be enforced by making amendments to the Inland Revenue Ordinance.
Profits tax: the ceiling of the tax reduction is applied to each business.
Salaries tax: the ceiling is applied to each individual taxpayer. However, for married couples jointly assessed, the ceiling is applied to each married couple (i.e. capped at $6,000 in total).
Personal assessment: the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If a taxpayer elects for personal assessment jointly with his/her spouse, the tax reduction is capped at $6,000 for the married couple.
It should be noted that the proposed tax reduction will not be applicable to property tax. However, individuals with rental income may enjoy the reduction under personal assessment if eligible for personal assessment.
If a taxpayer is separately chargeable to salaries tax and profits tax, they can enjoy tax reduction under each type of tax. In the case of a taxpayer who has business profits or rental income and opts for personal assessment, the reduction will be based on the tax payable under personal assessment, which may differ from the amount of tax reduction they would have received if they were not assessed under personal assessment. This will require a case-by-case assessment.
Eligible taxpayers who want to opt for personal assessment should complete Part 7 of their tax return for individuals (BIR60) for the year of assessment 2022/23. Individuals who have salaries income only, without any business profits or rental income, do not need to select personal assessment.
The proposed reduction will reduce the amount of tax payable 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. After the enactment of the relevant legislation, the Inland Revenue Department will implement the reduction in the final assessment. For any final assessment for 2022/23 issued before the enactment of the law, the Inland Revenue Department will make a reassessment after the enactment. Taxpayers do not need to make any applications or inquiries to the Department.
The proposed tax reduction only applies to the final tax for the year of assessment 2022/23 and not to the provisional tax for the same year. Therefore, taxpayers are still required to pay their provisional tax on time, despite the proposed reduction. The provisional tax paid will be used to pay the final tax for the year of assessment 2022/23 and the provisional tax for the year of assessment 2023/24. Any excess balance will be refunded.
To further enrich the talent pool and attract more new capital to Hong Kong, the government will introduce a new Capital Investment Entrant Scheme. Applicants shall make investments at a certain amount in the local asset market, but excluding property. Upon approval, they may reside and pursue development in Hong Kong.
Details of the Scheme will be announced later.
Want to know more about the Hong Kong Budget 2023-24 and what it means for you/your business? Contact us via the form below or info@fidinamgw.com. Our experts at Fidinam Hong Kong are here to support you.
You can visit the full budget speech here or check out the highlights leaflet of the Budget here.