Profits Tax
Key proposals
- No changes proposed to tax rates
Reduction of 100% in Profits Tax payable for 2023-24, subject to a ceiling of HKD 3,000 - Profits Tax taxpayers will be granted tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition
- Commence study on enhancements to tax concession measures for maritime industry
- To introduce legislative proposal to implement “patent box” tax incentive. Profits tax rate to be reduced to 5% for profits derived from qualifying IP
- The time limit for claiming allowances for industrial buildings, commercial buildings and structures will be removed
- Enhance preferential tax regimes for funds and family offices
| Corporations | Unincorporated businesses | |
|---|---|---|
| Standard tax rate* | 16.5% | 15% |
Two-tiered Profits Tax rates regime Qualifying taxpayers may be taxed at the following rates: |
||
| - First HKD 2 million of assessable profits | 8.25% | 7.5% |
| - Remaining balance | 16.5% | 15% |
| Note: Only one entity within a group can benefit from the two-tiered rates |
* Concessionary regimes are available for certain specified industries or business activities.
Profits Tax on royalties paid to non-residents
When royalty payment is made to a non-resident associated person and the underlying intellectual property has once been owned by any Hong Kong taxpayer, the assessable profits of the non-resident associated person are deemed to be 100% of the payment (i.e. effective tax rate is 15% or 16.5%). In other cases, the assessable profits of the non-resident person are generally deemed to be 30% of the payment (i.e. effective tax rate is 4.5% or 4.95%). The effective tax rate may be reduced under the terms of the applicable double taxation agreement or election of the two-tiered Profits Tax rates.
No changes proposed in tax rates for 2024-2025
| Depreciation allowances for plant and machinery | |
| - Initial allowance | 60% |
| - Annual allowance | 10%, 20% or 30% |
| Industrial building allowances | |
| - Initial allowance | 20% |
| - Annual allowance | 4% |
| Commercial building allowance | 4% |
| Building refurbishment | 20% deduction for 5 years |
| Expenditure on computer hardware and software | 100% deduction |
| Expenditure on environmentally friendly machinery and equipment | 100% deduction |
| Enhanced tax deduction for qualifying research and development expenditure | 300% (for the first HKD 2 million) 200% (for the remaining balance) |
Source: Inland Revenue Ordinance
Salaries Tax
Key proposals
- To implement a two‑tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25
- Reduction of 100% in Salaries Tax payable for 2023-24, subject to a ceiling of HKD3,000
Tax rates
The tax charge for Salaries Tax is the lower of the following:
- Net assessable income less charitable donations and allowable deductions at the standard rate; or
- Net assessable income less charitable donations, allowable deductions and personal allowances, charged at the progressive rates below.
| 2016-2017 | Rate | HKD | 2017-2018 | Rate | HKD | 2018-2019 to 2024-2025 | Rate | HKD |
|---|---|---|---|---|---|---|---|---|
| First HKD 40,000 | 2% | 800 | First HKD 45,000 | 2% | 900 | First HKD 50,000 | 2% | 1,000 |
| Next HKD 40,000 | 7% | 2,800 | Next HKD 45,000 | 7% | 3,150 | Next HKD 50,000 | 6% | 3,000 |
| Next HKD 40,000 | 12% | 4,800 | Next HKD 45,000 | 12% | 5,400 | Next HKD 50,000 | 10% | 5,000 |
| Next HKD 50,000 | 14% | 7,000 | ||||||
| Remaining balance | 17% | 17% | 17% |
| Allowances for individuals | 2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 HKD |
2023-2024 HKD |
2024-2025 HKD |
|
|---|---|---|---|---|---|---|---|---|
| Personal allowances | Basic | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 |
| Married | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | 264,000 | |
| Single parent | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | 132,000 | |
| Disabled | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | |
| Child allowances | 1st to 9th child (each) | |||||||
| Year of birth | 240,000 | 240,000 | 240,000 | 240,000 | 240,000 | 240,000 | 260,000 | |
| Other years | 120,000 | 120,000 | 120,000 | 120,000 | 120,000 | 130,000 | 130,000 | |
| Dependent parent and grandparent allowances | ||||||||
| Aged 60 or above, or disabled | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | |
| Aged between 55 and 59 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Additional dependent parent and grandparent allowances | ||||||||
| Aged 60 or above, or disabled | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | |
| Aged between 55 and 59 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |
| Disabled dependent (spouse/child/parent/grandparent/brother/sister) allowances | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | |
| Dependent brother/sister allowances | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | 37,500 | |
| Deductions – maximum limit | 2018-2019 HKD |
2019-2020 HKD |
2020-2021 HKD |
2021-2022 HKD |
2022-2023 HKD |
2023-2024 HKD |
2024-2025 HKD |
|---|---|---|---|---|---|---|---|
| Self-education expenses | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Elderly residential care expenses | 100,000 | 100,000 | 100,000 |
100,000 |
100,000 | 100,000 | 100,000 |
| Mandatory contributions to recognised retirement schemes | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 | 18,000 |
| Home loan interest | 100,000 | ||||||
| Approved charitable donations | 35% of assessable income | ||||||
| Qualifying voluntary health insurance scheme policy premiums | - | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person | 8,000 per insured person |
| Annuity premiums and MPF voluntary contributions | - | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 |
| Domestic rents deduction | - | - | - | - | 100,000 | 100,000 | 100,000 |
Source: Inland Revenue Ordinance
Other Taxes
Property Tax, Rates, Stamp Duty and Hotel Accommodation Tax
Key proposals
- Hotel Accommodation Tax
Increase from 0% to 3% starting from 1 January 2025 - Rating System
A progressive rating system for domestic properties will be introduced in the fourth quarter of 2024-25 - Stamp Duty
No Special Stamp Duty, Buyer’s Stamp Duty or New Residential Stamp Duty needs to be paid for any residential property transactions starting from 28 February 2024 - Property Tax
No changes proposed - Rates (domestic property)
Rates waiver for each domestic property for the first quarter of 2024-25, subject to a ceiling of HKD 1,000 for each rateable property - Rates (non-domestic property)
Rates concession for each non-domestic property for the first quarter of 2024-25, subject to a ceiling of HKD 1,000 for each rateable property
Stamp Duty
| Lease term | Rate |
|---|---|
| Not defined or is uncertain | 0.25% of the yearly or average yearly rent |
| Does not exceed 1 year | 0.25% of the total rent payable over the term of the lease |
| Exceeds 1 year but not exceeding 3 years | 0.5% of the yearly or average yearly rent |
| Exceeds 3 years | 1% of the yearly or average yearly rent |
| Tax rate |
|---|
| 0.20% of the consideration or the market value of the stock as at the transfer date – whichever is higher |
Sale or transfer of immovable properties
Ad valorem stamp duty
| Exceeds | Does not exceed | Scale 2 rates* (for residential and non-residential properties) |
|---|---|---|
| HKD 3,000,000 | HKD 100 | |
| HKD 3,000,000 | HKD 4,500,000 | 1.5% |
| HKD 4,500,000 | HKD 6,000,000 | 2.25% |
| HKD 6,000,000 | HKD 9,000,000 | 3.0% |
| HKD 9,000,000 | HKD 20,000,000 | 3.75% |
| HKD 20,000,000 | 4.25% |
* Subject to marginal relief
Cancelling all demand-side management measures for residential properties
The Financial Secretary has announced no Special Stamp Duty, Buyer’s Stamp Duty or New Residential Stamp Duty needs to be paid for any residential property transactions starting from 28 February 2024.
| Property holding period | Tax rate |
|---|---|
| 6 months or less | 20%# |
| More than 6 months but not exceeding 12 months | 15%# |
| More than 12 months but not exceeding 24 months | 10%# |
| Tax rate | |
|---|---|
| For non-permanent Hong Kong residents | 15%# |
# On the sales consideration or market value of property at the date of sale (whichever is higher)
^ Applicable to instruments executed on or after 25 October 2023 and before 28 February 2024
Property Tax
| Tax rate | 15% |
The tax rate is applied to the “net assessable value” of the property which is calculated at the total rent receivable (net of rates) less 20% statutory allowance for repairs and outgoings.
Hotel Accommodation Tax
| Tax rate | 3% |
Increase from 0% to 3% starting from 1 January 2025
Rates
| Tax rate | 5% |
The tax rate is applied to the “rateable value” which is the estimated annual rental value of the property at a designated valuation reference date. A progressive rating system for domestic properties will be introduced in 2024-25.
Proposed progressive rating system for domestic properties from the fourth quarter of 2024-25 onwards
| Annual rateable value (Equivalent monthly rental) |
Proposed rates |
|---|---|
| HKD 550,000 or below (monthly rental of HKD 45,833 or below) |
5% (unchanged) |
| HKD 550,001 - HKD 800,000 (monthly rental of around HKD 45,833 to HKD 66,667) |
First HKD 550,000: 5% Next HKD 250,000: 8% |
| Above HKD 800,000 (monthly rental of over HKD 66,667) |
First HKD 550,000: 5% Next HKD 250,000: 8% Above HKD 800,000: 12% |
Sources: Inland Revenue Ordinance, Stamp Duty Ordinance, Rating and Valuation Department’s website