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New tax relief measures in Hong Kong budget

Mar 12, 2018

The new Hong Kong budget was released recently, and Offshorelicense Ltd analysts have prepared the information on 2018 tax novelties for you. The most important changes apply to the taxation of environmental-friendly technologies and to individuals’ taxation. The relevant changes are listed below in greater details.

• The companies, that invest in green technologies, will get the tax relief. Costs, spent on environmental-friendly equipment or machinery for business and/or on implementing renewable energy, will have deduction period. It is proposed to have a 1-year assessment period for all categories, but it is not a final, definite period. It is reasonable to monitor changes on this matter.

• Taxpayers might have a maximum HKD30,000 (USD3,830) tax for 2017-2018. This will work for salaries tax, profit tax and tax under the personal assessment. More than 2 million taxpayers might have their tax reduced by 75 percent for the year of assessment 2017-2018.

• Tax refunds will also take place this year. If you overpaid taxes due to the legislation delay, you can expect a refund. This will not concern the property tax, however, the rental income can be refunded in case it is eligible under the personal assessment.

• The Government also promises to broaden the tax exemption scope. This year, the exemption relates to debt instruments and for any other instruments having the original maturity not less than 7 years. Moreover, the debt instrument scheme might be expanded shortly. For now, only instruments lodged and cleared by the Central Moneymarkets Unit of the Hong Kong Monetary Authority are eligible. The new Budget states that the list will be extended with the debt securities listed on the Hong Kong Stock Exchange.

• The personal income tax will also be subjected to the upcoming change. Personal income tax rate will now be chargeable for incomes above HKD200,000 (USD 25,512). Working families and persons with disabilities will still have different tax reliefs listed in the Budget. Moreover, married couples will have a choice on filing personal income tax. They will be allowed to file it separately.

Plan your business wisely and you can easily cut tax expenses. Moreover, if you are subjected to the personal taxation in Hong Kong, this year might become very profitable. Do not hesitate to use professional consultant services if you are not sure how to deal with the tax matters.

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