Tax laws Hong Kong
Hong Kong's tax system is characterized by its simplicity and low rates, contributing to its status as a global financial hub. The primary taxes include Profits Tax, Salaries Tax, and Property Tax, all governed by the Inland Revenue Ordinance (Cap. 112).
Key Taxes:
Profits Tax: Levied on corporations and unincorporated businesses, with a standard rate of 16.5% on assessable profits. A two-tiered rate system applies, reducing the rate to 8.25% for the first HKD 2 million of profits.
Salaries Tax: Imposed on income from employment, with progressive rates starting at 2% and increasing to a maximum of 17% for income over HKD 200,000. Taxpayers can choose between the progressive rates and a standard rate of 15% on net income after deductions.
Property Tax: Applied to owners of land or buildings, with a standard rate of 15% on the net assessable value of the property. Deductions are allowed for rates paid and a notional 20% repair allowance.
Recent Developments:
Tax Reductions: In response to economic challenges, the government has introduced measures such as a 100% reduction in salaries tax and business profit tax up to HKD 1,500 for the year of assessment 2024/25. Additionally, the property transaction levy cap for stamp duty has been increased from HKD 3 million to HKD 4 million.
Liquor Tax Reduction: To rejuvenate the nightlife and tourism sectors, the liquor tax on spirits with an import price over HKD 200 has been reduced from 100% to 10%.
Compliance and Administration:
The Inland Revenue Department (IRD) administers tax collection and compliance. Taxpayers are required to file annual tax returns, and the IRD conducts audits to ensure compliance. Detailed information and resources are available on the IRD's official website.
Note: Tax laws and regulations are subject to change. It's advisable to consult the IRD or a tax professional for the most current information.
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