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Tax concessions proposed in 2008-09 Budget
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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
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