Key Tax Measures Proposed Under The 2024-25 Hong Kong Budget

On 28 February 2024, the Financial Secretary announced the 2024-25 budget with the underlying theme “Advance with Confidence. Seize Opportunities. Strive for High-quality Development.” (Budget) We set out below the key tax measures proposed under the Budget.

 

One-off reduction of salaries tax, tax under personal assessment and profits tax

For the year of assessment 2023/24, a one-off 100% tax reduction for salaries tax, tax under personal assessment and profits tax will be made subject to a cap of HKD3,000. The reductions are expected to be as follows:

 

For salaries tax and tax under personal assessment

Assessable Income (HKD)	Average amount of tax reduction (HKD)	Average % of tax reduced
200,000 and below	770	100%
200,001 to 300,000	2,230	57%
300,001 to 400,000	2,560	27%
400,001 to 600,000	2,720	13%
600,001 to 900,000	2,850	6%
Above 900,000	2,910	1%

 

For profits tax

Assessable Profits (HKD)	Average amount of tax reduction (HKD)	Average % of tax reduced
100,000 and below	2,000	46%
100,001 to 200,000	3,000	18%
200,001 to 300,000	3,000	11%
300,001 to 400,000	3,000	8%
400,001 to 600,000	3,000	6%
600,001 to 900,000	3,000	4%
Above 900,000	3,000	0.1%

 

Two-tiered standard rates regime for salaries tax and tax under personal assessment

Starting from the year of assessment 2024/25, a two-tiered standard rates regime will be implemented for salaries tax and tax under personal assessment. Where a taxpayer’s net income exceeds HKD5 million, salaries tax and tax under personal assessment will be calculated as follows:

Portion of Net Income	Standard Rate
First HKD5 million	15%
Amount exceeding HKD5 million	16%

 

Deduction for reinstating the condition of leased premises and allowances for industrial buildings and structures

A tax deduction for expenses incurred in reinstating the condition of leased premises to their original condition will be granted and the time limit for claiming allowances for industrial buildings and structures as well as commercial buildings and structures will be removed.

 

Increase in business registration fees

With effect from 1 April 2024, business registration fees will be increased by HKD200 to HKD2,200 per year, and the business registration levy of HKD150 will be waived for two years. 

 

Resumption of hotel accommodation tax

With effect from 1 January 2025, hotel accommodation tax will be resumed at a rate of 3%.

 

Abolition of all demand-side management measures for residential properties

All instruments executed on or after 28 February 2024 for the sale and purchase or transfer of residential property are no longer subject to Special Stamp Duty, Buyer’s Stamp Duty and New Residential Stamp Duty.

 

Rates for domestic and non-domestic properties

A rates concession subject to a ceiling of HKD1,000 for each domestic or non-domestic rateable property will be provided for the first quarter of 2024/25.

Furthermore, legislative amendments will be introduced in the first half of 2024 to implement a progressive rating system for domestic properties with a view of becoming effective from the fourth quarter of 2024-25. The system is intended to affect domestic properties with a rateable value over HKD550,000.

 

Social security and working family allowance

An allowance equal to one half of a month of the standard rate Comprehensive Social Security Allowance payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance will be provided to eligible social security recipients. A similar arrangement will also be applied to recipients of Working Family Allowance.

 

Tobacco control policies

From 28 February 2024 onwards, the duty on cigarettes has been increased by HKD80 cents per stick and the duty on other tobacco products will be increased by the same proportion.

 

“Patent box” tax incentive

The Hong Kong Government intends to introduce legislative amendments to the Inland Revenue Ordinance to implement a “patent box” tax incentive to reduce the tax rate for profits derived from qualifying intellectual property to 5% in the first half of 2024.

 

Corresponding legislative changes are expected to be introduced and made this year to reflect the proposed measures. In light of this, taxpayers should look out for further updates from the Hong Kong Government and contact their tax representatives for tax planning once more details of the tax initiatives are known. We will continue to monitor these changes and provide key updates once available.