Tax Thursday: Hong Kong Budget 2023/24 Key Tax Changes

Snapshot of Key Tax Changes Announced in Hong Kong Budget 2023/24\

• Issue electronic consumption vouchers with a total value of HK$5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above in two instalments.

The first HK$3,000 will be distributed in April 2023 using the registration data of the preceding year’s scheme. The remaining voucher will be disbursed together with the vouchers for the new eligible individuals in the middle of the year.

Eligible individuals coming to Hong Kong under different admission schemes and overseas students studying in Hong Kong will also receive the voucher in half value at HK$2,500.

• Reduce profits tax for 2022/23 by 100%, subject to a ceiling of HK$6,000 for each business.
• Reduce salaries tax and tax under personal assessment for 2022/23 by 100%, subject to a ceiling of HK$6,000 per case.
• Increase the basic child allowance and the additional child allowance for each child born during the year of assessment from the current HK$120,000 to HK$130,000 starting from the year of assessment 2023/24.
• Some adjustments have been made to the value bands of the ad valorem stamp duty payable for the sale and purchase or transfer of residential and non-residential properties, with effect from 11am of 22 February 2023. The purpose is to ease the burden on ordinary families when purchasing their first residential properties.
• Increase the tax deduction for the Mandatory Provident Fund (MPF) voluntary contributions made by employers for their employees aged 65 or above, from the current 100% to 200% in respect of such expenditure.
• Enhance the aircraft leasing preferential tax regime to attract aircraft leasing companies to establish presence in Hong Kong.
• Introduce a “patent box” tax incentive to encourage the I&T sector to create more patented inventions.
• Propose to provide tax deduction for the spectrum utilization fees paid by telecommunications network operators which successfully bid for radio spectrum.
• Hong Kong plans to apply the global minimum effective tax rate on large MNE groups and implement the domestic minimum top-up tax starting from 2025 onwards to address OECD’s base erosion and profit shifting (abbreviated as BEPS 2.0) plan.

To do
Businesses operating in Hong Kong and individuals living in Hong Kong should consider these key tax changes that have been recently announced in the Budget 2023/24. It is important to assess how they are impacted or to utilize any tax benefits from new or enhanced measures announced.

Questions

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