Tax measures proposed in 2019-20 Budget
In his Budget delivered today (February 27), the Financial Secretary proposed the following tax measures.
The Financial Secretary proposed a 75 per cent reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2018-19, subject to a ceiling of $20,000 per case. This measure will cost the Government $18.9 billion, benefiting about 2.05 million taxpayers.
The tax reduction will reduce the amount of tax payable by taxpayers for the year of assessment 2018-19. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2018-19, to be issued in the coming April and May respectively, as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment. Tax bills, with the reduction duly reflected, will be issued starting from about late July 2019. As usual, profits tax and personal assessment bills will fall due starting from November this year, and salaries tax in January 2020.
The proposed tax reduction will only be applicable to the final tax for the year of assessment 2018-19, but not to the provisional tax of the same year. Therefore, despite the proposed reduction, taxpayers are still required to pay the provisional tax on time as stipulated in the demand notes that have been issued to them. The provisional tax paid will, in accordance with the Inland Revenue Ordinance, be applied in payment of the final tax for the year of assessment 2018-19 and provisional tax for the year of assessment 2019-20. Excess balance, if any, will be refunded.
The proposed tax reduction is not applicable to property tax. Nevertheless, individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.
A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he would get if he was not assessed under personal assessment. The exact position will need to be evaluated case by case. Individuals having business profits or rental income may make election for personal assessment in their tax returns for the year of assessment 2018-19.
The Financial Secretary also proposed to waive the business registration fees for 2019-20.
The above proposed tax measures will be effected by amending the relevant ordinances. Details of the proposals and examples of tax calculations are available on the website of the Inland Revenue Department (www.ird.gov.hk) for the public's reference. They can also be obtained through the fax hotline 2598 6001.
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