The Hong Kong government has announced a series of measures in response to local economic uncertainties and the COVID-19 outbreak. Some of the key tax measures include:
- A reduction of 2019-20 Profits Tax payable by 100%, subject to a ceiling of HKD 20,000
- A reduction of the 2019/20 Salaries Tax and tax under personal assessment by 100%, subject to a ceiling of $20,000.
- Waiver of the surcharge for up to one year on tax payments deferred under an approved instalment plan. The waiver is applicable for the 2018/19 year of assessment, and covers profits tax, salaries tax, and personal assessment. Taxpayers in need could apply for an instalment plan before the due date of the respective tax payments
- When Government announced work from home requirements for the public service, tax deadlines (including tax return filing, tax payment and responding to enquiries) have generally been deferred until the tax authority reopens.
Further relief measures can be found in KPMG's summary of the 'Economic Stimulus and Relief Measures 2019-20'.
The Hong Kong Inland Revenue Department announced an extended deadline for notification in relation to country-by-country (CbC) reporting in response to the coronavirus (COVID-19) pandemic.
Under Hong Kong tax rules, a Hong Kong entity of a “reportable group” must file a notification in relation to CbC reporting for an accounting period, and this notification must be filed within three months after the end of the relevant accounting period.
According to the Inland Revenue release, the Hong Kong entity and its service provider will be deemed as having complied with the notification deadline for the relevant accounting period that ended between 31 December 2019 and 29 February 2020, if the notification is received via the CbC reporting portal on or before 1 June 2020.
On 8 April 2020, the Hong Kong government unveiled a new stimulus package to support businesses and individuals in response to the coronavirus (COVID-19) pandemic. Various administrative measures announced by the Inland Revenue Department to assist taxpayers experiencing financial difficulties as a result of the COVID-19 outbreak include:
- Delaying by one month, the issuance of profits tax returns to 4 May 2020 and salaries tax returns to 1 June 2020 for the year of assessment for 2019/20
- Extending the deadlines for filing (lodgment) to 4 May 2020 of objections and holdover applications as well as for filing due date of tax returns that fall between 23 March 2020 and 2 May 2020
- Extending to 1 June 2020 the date for filing country-by-country reporting notification for entities with accounting periods ended between 31 December 2019 and 29 February 2020
- Deferring by three months the deadline for remitting payments of profits tax, salaries tax and tax under personal assessment for the year of assessment 2018/19 due in April, May and June 2020
- For taxpayers who have promptly settled the first installment of their respective demand notes under Salaries Tax, Personal Assessment and Profits Tax for the year of assessment 2018/19, the deadline for payment of tax for the second installment will be automatically extended for 3 months from the due date of the second installment as specified on the demand note.
- If the Salaries Tax, Personal Assessment and Profits Tax demand notes for the year of assessment 2018/19 fall due between April to June 2020, the deadline for payment of all tax payable thereon will be automatically extended for 3 months.
Individual Income Tax
- The Hong Kong government has announced a reduction the 2019-20 salaries tax and tax under personal assessment by 100%, subject to a ceiling of HKD20,000
- 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:
- Beneficiaries of the assistance granted will be exempt from profits tax and salaries tax unless “the sums are paid for general business activities and are not paid in a matching arrangement.” Most of the key supports for businesses (such as the employment support scheme) are covered by the tax exemption. A summary of the proposed tax treatment for the two rounds of measures under the anti-epidemic fund is shown below.
- The same principles will be adopted to provide tax exemptions if and when further relief measures are rolled out under the anti-epidemic fund.
In respect of 2019/20 tax returns:
- Employers and employees do not need to report the sums exempted in the tax returns.
- Businesses or individuals who have already filed their tax returns can submit written notifications to the Hong Kong Inland Revenue Department (IRD) to amend the relevant information. Employers would need to file revised employer’s return(s) for the relevant employee(s), if applicable.
Additional information regarding employment-related measures, economic stimulus measures and other measures.