The Hong Kong government on 27 May 2020 released guidance—known in English as “The Exemption From Salaries Tax and Profits Tax (Anti-epidemic Fund) Order”—to exempt from tax most payments or grants of subsidies and financial assistance given to individual and business taxpayers and made in response to the coronavirus (COVID-19) pandemic.
The tax exemptions would be effective from the year of assessment 2019/20.
The order has an effective date of 29 May 2020, and will be tabled at the Legislative Council for “negative vetting” on 3 June 2020.
Key points include:
The order confirms the tax treatment of the financial assistance granted under the anti-epidemic fund. The tax exemptions for most of the relief measures may help to alleviate the financial burden of industries, businesses and individuals affected by the COVID-19 pandemic. However, while tax remains an important consideration, businesses need to keep in mind other factors, such as long-term business plans, when assessing their eligibility for the relief measures. From a tax return filing perspective, businesses or individuals who have previously included the subsidies received under the anti-epidemic fund as taxable income (now confirmed to be tax exempt) in their tax returns need to consider amending these tax returns.
For more information, contact a KPMG tax professional:
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