(Source : news.gov.hk)
Tax concessions proposed in 2008-09 Budget
In his Budget delivered today (February 27), the Financial Secretary proposed a package of tax relief measures. One of the measures is a 75% reduction of earnings and profits tax in 2007/08, subject to a ceiling of $25,000 per case.
The tax reduction will benefit all taxpayers in the year, including the working population liable to salaries tax, property owners with rental income subject to property tax, and businesses and corporations liable to profits tax. Individuals electing personal assessment are also included. In total, 1.6 million taxpayers will enjoy the tax reduction. The measure will cost the Government $14.8 billion in 2008-09.
The tax reduction will be reflected in the tax bill for the coming year. Taxpayers will, as usual, file their tax returns for 2007/08 which will be issued starting in the coming April and May. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment for 2007/08. Most taxpayers will receive their tax bills, with the reduction duly reflected, starting from the third quarter in 2008. As in last year, profits tax, property tax and personal assessment bills will fall due from November this year onwards, and salaries tax in January 2009.
The proposed reduction will only be applicable to the 2007/08 final tax, but not to the provisional tax of the same year. For most taxpayers, the second instalment of their 2007/08 provisional tax will fall due in April this year, which should be paid on time despite the proposed reduction. The provisional tax paid will, in accordance with the Inland Revenue Ordinance, be applied in payment of the final tax for 2007/08 and provisional tax for 2008/09. Excess balance, if any, will be refunded.
Unlike that in the last year, this year's tax reduction is applicable to all taxpayers. Individuals with rental and/or business income will enjoy such reduction whether they elect personal assessment or not. However, the amount of the reduction they will get might be different under personal assessment. The exact position will need to be evaluated case by case. Individuals having business and rental income and eligible for personal assessment may make such election in their 2007/08 tax returns. The department will check if the personal assessment election will reduce the amount of tax payable in each case, and assess each taxpayer to his advantage.
Along with the above one-off concession, the Financial Secretary has also proposed some tax measures for 2008/09, including raising the personal allowances, widening the tax bands, lowering the standard rate and corporate profits tax rate, raising the deduction ceiling for charitable donations and providing tax deductions for capital expenditure on environment-friendly facilities.
Subject to the passing of the relevant legislation by the Legislative Council, these measures will take effect from 2008/09 onwards. The department will assess 2008/09 provisional tax based on the new allowances, tax bands and rates.
It was also proposed in the Budget that business registration fees be waived for the year 2008-09, and hotel accommodation tax be reduced to 0%. Details of the above proposals and examples of tax calculations are available on the department's website (www.ird.gov.hk) or fax hotline 2598 6001.
Ends/Wednesday, February 27, 2008
Issued at HKT 18:22