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(Source :

Tax deduction for environment-friendly facilities to be introduced


The Government will introduce accelerated tax deduction for environment-friendly facilities in an effort to encourage the business community to use them.

The proposal, among other budgetary measures, was contained in the Revenue Bill 2008 gazetted yesterday (April 25). Subject to the passing of the Bill by the Legislative Council, amendments will be made to the Inland Revenue Ordinance (IRO).

A government spokesman said that eligible facilities were divided into two categories - environmental protection machinery and environmental protection installations.

"Environmental protection machinery includes low noise construction machinery or plant registered under the Quality Powered Mechanical Equipment system administered by the Environmental Protection Department (EPD), as well as waste treatment, wastewater treatment and air pollution control machinery or plant in compliance with the requirements under the various ordinances administered by the EPD," he said.

"A 100% deduction under profits tax will be provided in the year of purchase for the capital expenditure incurred on the provision of eligible machinery," he said.

"Environmental protection installations will mainly be renewable energy installations, including solar photovoltaic installations, wind turbine installations and thermal waste treatment installations. Other eligible installations are the energy efficient building installations registered under the Hong Kong Energy Efficiency Registration Scheme for Buildings administered by the Electrical and Mechanical Services Department."

"A deduction under profits tax for 20% of the capital expenditure incurred on the construction of eligible installations will be provided in each of the five consecutive years starting from the year of acquisition," the spokesman said.

Eligible machinery and installations will be listed in Part 1 and Part 2 respectively of a new schedule to the IRO (Schedule 17). After the enactment of the amendments to the IRO, taxpayers may claim the deductions in their profits tax returns for 2008-09 and subsequent years of assessment.

A taxpayer may have owned and have been using environmental protection machinery or installations before implementation of the proposal, in which they may elect to have the reducing value of the machinery under the depreciation allowance regime fully deducted in 2008-09 or, in the case of installations, to have 20% of the residual value of the installations deducted in each of the five consecutive years starting from 2008-09.

Ends/Saturday, April 26, 2008
Issued at HKT 11:00