2001-02 Annual Report, Inland Revenue Department
(Text Only)


Revenue


The economy in Hong Kong underwent a downward adjustment in 2001, with real growth lower than that of 2000. During the year, there was an increase of $3.9 billion in Earnings and Profits Tax collections, representing a growth of 5% as compared with the previous year (Figure 1, Schedules 1 & 2).However, the sluggish property market coupled with reduced stock market turnover resulted in a decline in stamp duty collections by $2.3 billion.

Figure 1 Revenue collected by tax type
Type of tax 1998-99
(Dollars million)
1999-2000
(Dollars million)
2000-01
(Dollars million)
2001-02
(Dollars million)
Profits Tax - Corporations 37,686.3 32,333.2 38,960.5 39,272.4
Profits Tax - Unincorporated Businesses 7,565.6 5,365.3 4,008.9 5,103.3
Salaries Tax 25,062.7 24,831.5 26,302.9 28,634.6
Property Tax 1,333.6 1,167.9 1,143.1 1,135.7
Personal Assessment 4,098.3 3,216.2 3,454.9 3,603.0
Total Earnings and Profits Tax 75,746.5 66,914.2 73,870.3 77,749.0
Estate Duty 1,236.7 1,271.6 1,502.6 1,927.8
Stamp Duty 10,188.7 12,115.9 10,911.2 8,636.6
Betting Duty 12,228.7 11,937.8 12,630.1 11,571.3
Business Registration Fees 1,275.7 1,276.2 1,300.7 1,240.2
Hotel Accommodation Tax 219.0 182.4 222.5 202.9
Total revenue collected 100,895.3 93,698.1 100,437.4 101,327.8
Percentage change over previous year -26.6% -7.1% 7.2% 0.9%

Overall, revenue collected by the Department during 2001-02 totalled $101.3 billion (about 60% of the Government General Revenue, see Figure 2). This represents an increase of $890 million, or 0.9%, over the amount collected the previous year. The major part of revenue collected came from Profits Tax and Salaries Tax, which together contributed 72% (Figure 3)


Figure 2 Government General Revenue
Revenue 1998-99
(Dollars billion)
1999-2000
(Dollars billion)
2000-01
(Dollars billion)
2001-02
(Dollars billion)
Inland Revenue Department collections 101 94 101 102
Other General Revenue 78 68 78 55
Total Government General Revenue 179 162 179 157
Percentage of Inland Revenue Department collections 56.3% 57.8% 56.2% 64.7%

Figure 3 Composition of the revenue collection 2001-02
Type of tax
Percentage
Profits Tax
43.8%
Salaries Tax
28.3%
Stamp Duty
8.5%
Betting Duty
11.4%
Others
8.0%

Under the "Enhanced Productivity Programme", the Department achieved productivity savings during the year. However, the cost of collection of revenue increased from 1.31% to 1.39% (Figure 4). This was largely attributed to the maturity of high interest-bearing tax reserve certificates sold in 1998-99. Numerous certificates were redeemed in the year, leading to increased interest expenses by over 50%.

Figure 4 Cost of collection
Cost of collection 1998-99 1999-2000 2000-01 2001-02
Percentage 1.21% 1.37% 1.31% 1.39%



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(Last updated/reviewed : January 13, 2003)