Hong Kong Policy Address – Tax Incentives
Carrie Lam, the Chief Executive of Hong Kong, presented the first Policy Address in her term of office to Legislative Council.
In her address, the Chief Executive laid out a wide range of measures to enhance the economy and address various social issues, including tax relief policy.
Lam said: “In order to further enhance the competitiveness of Hong Kong, we will demonstrate greater determination in our taxation policies. The Financial Services and the Treasury Bureau has made proposals on the two tax measures put forward in my Election Manifesto, with a rate of tax reduction even deeper than what I had proposed, and will strive to implement them within 2018. On the two-tier profits tax system, the profits tax rate for the first $2 million of profits of enterprises will be lowered to 8.25%, or half of the standard profits tax rate, instead of 10% as proposed in my Election Manifesto. Profits above that amount will continue to be subject to the standard tax rate of 16.5%. To ensure that the tax benefits will target small and medium enterprises, we will introduce restrictions such that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate. To encourage research and R&D investment by enterprises, we propose that the first $2 million eligible R&D expenditure will enjoy a 300% tax deduction with the remainder at 200%.”
These measures are expected to be passed and implemented in time for the 2018/19 tax year.
For more information please feel free to contact Alina Moroz at alinam@zetland.biz
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