HONG KONG – The Hong Kong Special Administrative Region government welcomed on Wednesday the passage of a bill providing one-off tax concessions to more than two million residents and a two-tiered individual tax structure that is expected to bring in over HK$900 million ($115.3 million) in additional revenue annually.

In a statement, the government said the Inland Revenue (Amendment) (Tax Concessions and Two-tiered Standard Rates) Bill 2024 passed by the Legislative Council also allows the additional deduction ceiling amount of HK$20,000 for home loan interest or domestic rents, on top of the basic deduction ceiling of HK$100,000, for qualified taxpayers.

The bill reduces salaries tax, tax under personal assessment and profits tax for the year of assessment 2023/24 by 100 percent, subject to a ceiling of HK$3,000 per case

"The government takes into account various factors when adjusting different tax measures. In addition to balancing economic and social needs, we are also committed to maintaining the competitive advantage of a low and simple tax regime,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu was quoted as saying in the statement.

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The bill, which will be gazetted on May 31, will give effect to the HKSAR government's proposals announced in the 2024-25 Budget and the 2023 Policy Address.

These include implementing a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. 

In calculating the amount of salaries tax or tax under personal assessment at standard rates, the first HK$5 million of net income will continue to be subject to the standard rate of 15 percent while the portion exceeding HK$5 million will be subject to the standard rate of 16 percent.

“The proposed two-tiered standard rates regime is expected to bring about an additional revenue of HK$905 million per annum for the government, affecting only 0.6 percent of taxpayers,” Hui said.

“We believe that it will not have adverse impact on Hong Kong's tax competitiveness and attractiveness to talent,” he added.

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The bill also reduces salaries tax, tax under personal assessment and profits tax for the year of assessment 2023/24 by 100 percent, subject to a ceiling of HK$3,000 per case.

Hui said the one-off tax concessions will benefit about 2.06 million taxpayers and about 160,000 tax-paying businesses.

“The additional deduction ceiling amount for home loan interest and domestic rents will benefit all taxpayers meeting the specified conditions, alleviating their financial burden of housing," he added.