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Tax Concessions under Inland Revenue
Ordinance |
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Waiving of Business Registration
Fee for the Year 2008-09 |
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Waiving of Hotel Accommodation Tax
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FAQs |
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Tax
Concessions under Inland Revenue Ordinance |
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| Summary of Measures |
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In the 2008-09 Budget delivered on 27 February 2008, the
Financial Secretary proposed the following tax relief measures:
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1. |
A one-off reduction of 75% of the 2007-08 final tax in
respect of salaries tax, profits tax, property tax and tax
under personal assessment, subject to a ceiling of $25,000.
See One-off reduction in 2007-08 final tax
for details.
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2. |
Tax concessions from the year of assessment 2008-09 onwards
as follows:
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(a) |
The standard rate will be lowered from
16% to 15%, and the corporation profits tax rate from 17.5%
to 16.5%. |
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(b) |
The basic allowance and single parent
allowance will be increased from $100,000 to $108,000, and
married person's allowance from $200,000 to $216,000. |
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(c) |
Tax bands will be widened from $35,000
to $40,000 each. |
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(d) |
The deduction ceiling for approved charitable
donations will be raised from 25% to 35% of adjusted assessable
income or profits. |
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(e) |
Full deduction under profits
tax for capital expenditure on specified machinery or plant
conducive to environmental protection, or deduction over 5
years for installations of the same nature. |
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Individuals subject to Salaries Tax or Tax under
Personal Assessment
Individuals subject to Salaries Tax or tax under Personal
Assessment will enjoy a reduction of 75% of the final tax
for the year of assessment 2007-08, subject to a ceiling
of $25,000 per case. See One-off reduction
in 2007-08 final tax for details.
In addition, they will benefit from the following measures
from the year of assessment 2008-09 onwards:
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| 1. |
The basic allowance and single
parent allowance will be increased to their 2002/03 levels. |
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| . |
Present
(2007/08)
$ |
Proposed
(From 2008/09)
$ |
| Basic allowance
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100,000 |
108,000 |
| Married person's allowance |
200,000 |
216,000 |
Single parent allowance |
100,000 |
108,000 |
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| 2. |
Tax bands will be widened and the standard rate
will be lowered. |
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| Present
(2007/08) |
Proposed (From 2008/09) |
| Marginal
tax band |
Marginal
tax rate
(%) |
Marginal
tax band |
Marginal
tax rate
(%) |
First $35,000 of
chargeable income |
2 |
First $40,000 of
chargeable income |
2 |
| Next $35,000 |
7 |
Next $40,000 |
7 |
| Next $35,000 |
12 |
Next $40,000 |
12 |
| Remainder |
17 |
Remainder |
17 |
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Standard rate |
16 |
Standard rate |
15 |
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| 3. |
The deduction ceiling for approved charitable
donations will be raised from 25% to 35% of adjusted assessable
income.
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See Annex
1 and Annex
2 showing estimated tax savings of taxpayers by
income group after implementation of the measures for 2008-09.
Businesses subject to Profits Tax
Businesses subject to Profits Tax will enjoy a reduction
of 75% of the final tax for the year of assessment 2007-08,
subject to a ceiling of $25,000 per case. See One-off
reduction in 2007-08 final tax for details.
In addition, they will benefit from the following measures
from the year of assessment 2008-09 onwards:
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1. |
The standard rate will be lowered
from 16% to 15%, and the corporation profits tax rate from
17.5% to 16.5%.
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2. |
The deduction ceiling for approved
charitable donations will be raised from 25% to 35% of adjusted
assessable profits.
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3. |
Accelerated deduction for capital
expenditure on specified environmental protection facilities.
For machinery or plant, 100% deduction will be allowed for
the capital expenditure incurred. For installations forming
part of a building or structure, 20% deduction will be allowed
for each year in five consecutive years.
The list of eligible specified Environmental
Protection Facilities will be included as a schedule to the
Inland Revenue Ordinance. The list mainly includes machinery
or plant required under schemes or ordinances administered
by the Environmental Protection Department and some renewable
energy installations.
The proposed list of specified Environmental
Protection Facilities will be announced when the Revenue Bill
2008 is published in the gazette. However, the list should
only be regarded as final when the relevant ordinance is enacted.
The proposed tax deduction is not limited
to new purchases or installations. Specified Environmental
Protection Facilities already in use by a business are also
eligible for the proposed deduction. The reducing value or
residue of expenditure of the facilities under the depreciation
allowance regime will be treated as specified capital expenditure
for which deduction will be provided accordingly.
Owners of existing environmental protection
facilities that are of the types listed in the Schedule but
which do not meet the specification requirements (e.g. not
registered) yet, may register such facilities according to
the requirements. The facilities will qualify for the proposed
deduction after registration.
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Property Owners subject to Property
Tax
Property owners subject to Property Tax will
enjoy a reduction of 75% of the final tax for the year of
assessment 2007-08, subject to a ceiling of $25,000 per case.
See One-off reduction in 2007-08 final tax
for details.
In addition, they will benefit from the lowering
of the standard rate from 16% to 15% from the year of assessment
2008-09 onwards.
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Points to Note
Legislative amendments are required for
implementing each of the relief measures proposed in the
Budget. After enactment of the relevant legislation, the
Inland Revenue Department will automatically apply the new
allowances, tax rates and bands in calculating the 2008-09
provisional tax. Taxpayers are only required to complete
their tax returns for the year 2007-08 in the normal manner.
There is no need to make separate application for the relief
measures. See Examples
for typical examples showing tax savings of taxpayers liable
to salaries tax when the Budget relief measures are implemented.
You can use our tax
computation program to calculate your tax liability
under salaries tax or personal assessment under the 2008-09
Budget proposals.
In 2008-09, the deduction ceiling for approved
charitable donations will be raised from 25% to 35% of the
adjusted assessable income or profits. Taxpayers may apply
for holding over of provisional tax if the amount of charitable
donations made or to be made in 2008-09 exceeds or likely
to exceed 25% of the adjusted assessable income or profits.
If taxpayers made donations exceeding 25% in 2007-08, they
can put down the actual amount in 2007-08 tax returns. The
Inland Revenue Department will assess 2008-09 provisional
tax by reference to such amount of donations.
If after taking into account the allowable
amounts incurred in the basis period for the year of assessment
2008-09, the person's net chargeable income or assessable
profits chargeable to provisional tax are, or are likely
to be, less than 90% of those of the preceding year or of
the estimated sums that the person is liable to provisional
tax, the person is entitled to apply for holding over the
relevant part of the provisional tax. Application for holding
over of provisional tax should be lodged in writing with
the Commissioner not later than (a) 28 days before the day
by which the provisional tax is to be paid, or (b) 14 days
after the date of the notice for payment of provisional
tax, whichever is the later. The application should also
state clearly the grounds for holdover.
FAQ : The 2008-09 tax
concessions
One-off reduction in 2007-08 final tax
The Financial Secretary proposed a 75%
reduction of the 2007/08 final tax, subject to a ceiling
of $25,000 per case. Under Salaries Tax, the ceiling is
applied on individual taxpayer basis. For couples electing
to be jointly assessed, the ceiling is applied on each couple.
Under Property Tax and Profits Tax, the ceiling is applied
on each property let and each business respectively. In
Personal assessment, single taxpayers will each be subject
to the ceiling. Married couples must make their election
for personal assessment together and the ceiling will therefore
apply to each couple.
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. For example, if the final tax is $30,000,
the reduction will be $22,500 with a balance of $7,500 to
be paid. See Annex
3 for details of the amounts of tax savings enjoyed
by taxpayers of different income group under different tax
types.
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 from 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 would get might be different
when assessed under each type of tax or personal assessment.
The exact position would need to be evaluated case by case.
Therefore, 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 in
the way to his advantage.
Individuals having salaries income only,
but no rental income or business profits, do not need to
elect for personal assessment.
Tax bills issued before enactment of the
relevant legislation will not reflect the tax reduction.
The Inland Revenue Department will reassess them after such
enactment. Excess tax paid will be refunded from late July
onwards. Taxpayers are not required to apply for such refund
or make phone enquiry in this regard
FAQ : One-off
reduction in 2007-08 final tax
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Waiving
of Business Registration Fee for the Year 2008-09
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| 1. |
The Revenue (Reduction of Business Registration Fees) Order 2008 comes into effect on 1 April 2008. |
| 2. |
By the Revenue Order, the fees payable in respect of business registration certificates and branch registration certificates that with commencement date within the year 2008-09 will be reduced by a sum of $2,000 and $73 respectively. |
| 3. |
Businesses are still required to pay the levy for the Protection of Wages on Insolvency Fund. |
| 4. |
Please refer to the business
registration fee & levy table for details of the total
amount payable under a certificate. [hyperlink to Tax Information
¡V Others > Business Registration > List of Current Charges
> Business Registration Fee & Levy>The business registration
fee & levy table].
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| 5. |
The Business Registration Office has not demanded and will not demand businesses or branches the registration fees for the year 2008-09 in the notice of renewal and payment in respect of certificates with commencement date within 2008-09. Hence, those who received demand notes from the Business Registration Office have to settle the amounts demanded thereon when due.
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| Concessionary Refund of Registration Fee Paid |
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| 6. |
The Revenue Order only relates to the waiving of registration fees for new certificate or renewal certificate with commencement date in year 2008-09. It does not provide for refund of the 2008-09 registration fees paid.
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| 7. |
In order that businesses that have already paid the 2008-09 business registration fees or branch registration fees but are not required to renew their registration certificates in the year 2008-09 can also benefit from the concession, concessionary refunds will be allowed to them. |
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| Who is eligible |
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Businesses holding 3-year certificates with expiry dates on or after 31 March 2009. |
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Businesses whose registration certificates expire between 1 April 2008 and 31 March 2009 but are not required to renew their registration certificates because of cessation of business. |
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| How to apply |
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| 9. |
Based on the information in its database, the Business
Registration Office will start issuing invitation letter
and the application form IRBR188
from mid April 2008 to businesses that are eligible to apply
for the refund. If the business operator wishes to apply
for the concessionary refund, he needs to complete and return
the duly signed application form to the Business Registration
Office, either by post to P.O. Box 29015 Gloucester Road
Post Office, Hong Kong or in person at 4/F Revenue Tower,
5 Gloucester Road, Wanchai, Hong Kong.
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| 10. |
Where a business is eligible for the concessionary refund
as at 2 April 2008 but does not receive the invitation letter
and the application form from us by early May 2008, the
business operator may download the application form IRBR188
or obtain it by fax (fax number: 2824 1482), through IRD¡¦s
24-hour Fax-A-Form Service (telephone number: 2598 6001),
by post or in person at the IRD Office.
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| 11. |
The application should be made by:
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the sole proprietor ¡V in respect of a sole proprietorship business and its branch; |
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any of the partners ¡V in respect of a partnership business and its branch; |
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the secretary, manager or any of the directors ¡V in respect of a company and its branch; and |
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any of the principal officers ¡V in respect of a body of persons and its branch. |
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The application should be submitted to the Business Registration Office on or before 30 September 2009.
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| How much will be refunded |
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| 13. |
The Business Registration Office will proportionately refund
the amount of business registration fee or branch registration
fee paid by reference to the validity period of the certificate
held by the business, the number of days in the year 2008-09
and the amount of registration fees paid. Please refer to
the illustrative examples in the Computation
of the Refund Amount.
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| 14. |
The maximum refund amount is $2,000 for a business registration certificate and $73 for a branch registration certificate respectively. |
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Levy for the Protection of Wages on Insolvency Fund paid will NOT be refunded. |
| When to issue the refund |
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| 16. |
If the application is approved, the Business Registration Office will issue the refund cheque within 21 working days from the date of receipt of the application. |
| FAQ
: Waiving of Business Registration Fees |
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Waiving
of Hotel Accommodation Tax |
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| 1. |
The Financial Secretary proposed
in the 2008-09 Budget to waive the Hotel Accommodation Tax
(HAT).
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| 2. |
Currently, hotel guests are
levied a HAT at 3% on the hotel accommodation charges. To
waive the charge of HAT, the rate will be reduced to 0%. |
| 3. |
The Government will introduce
legislation to give effect to the proposal into the Legislative
Council as soon as possible. The proposed commencement date
will be published in the Amendment Bill when gazetted. |
| 4. |
Under the proposal, hotel guests
will not be levied any HAT on the hotel accommodation charges
from the commencement date. Similarly, hotels and guesthouses
will be relieved of their quarterly obligations to pay over
the HAT and file the HAT returns to the Inland Revenue Department
("IRD"). |
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For the quarter within which
the legislation is enacted, hotels and guesthouses will still
need to pay the HAT they have collected from guests and file
the HAT return to the IRD for the period where the current
3% rate is applicable, within 14 days of the commencement
date. |
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e.g., If the commencement date is 1 July
2008 (for illustration only), hotels and guesthouses will
need to pay over the HAT and file the HAT return for the period
from 1 April 2008 to 30 June 2008 on or before 14 July 2008. |
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