Taxation in Hong Kong

TAXATION IN HONG KONGMr. Leung Wing Chung

TAXES COLLECTED BY INLAND REVENUE DEPARTMENT (稅務局 ) (2010-11)

Type of tax ChineseSalaries tax 薪俸稅

Profits tax 利得稅Property tax 物業稅

Personal assessment(combination of the three taxes above)

個人入息課稅Estate duty 遺產稅Stamp duty 遺產稅

Betting duty 博彩稅Business registration fees 商業登記費

TAXES COLLECTED BY RATING AND VALUATION DEPARTMENT (差餉及物業估價處 ) (2010-11)

Type of tax ChineseRates 差餉

Government rent 地租 /地稅

Taxes / duties are also collected by the Customs and Excise Department (海關 ) and Transport Department (運輸署 ).

TAXES COLLECTED BY INLAND REVENUE DEPARTMENT (2010-11)

Salaries tax$44,254.70 mProfits tax

$93,183.10 m

Property tax$1,647.10 m

Personal assessment$3,921.80 m

Estate duty$212.80 m

Stamp duty$51,005.10 m

Betting duty$14,759.10 m

Business reg-istration fees

$35.70 mRates

$8,956.00 mGovernment

Rent$6,305.00 m

RATES AND GOVERNMENT RENT Payable by : Owners of property (pay per

quarter)

Ratable value of a property= estimated annual rent of the property

Rates = 5% of ratable value

Government rent = 3% of ratable value(only applicable to some properties)

RATES (EXAMPLES AND CLASS WORK)

The ratable value of a flat is $80 000. If the rates are charged at 5% p.a., find the rates payable per quarter.

Question Solution

Annual Rates

quarter

RATES (EXAMPLES AND CLASS WORK)

Betty pays $1200 per quarter for the rates of her flat. If the rates are charged at 5% p.a., what is the ratable value of her flat?

Let $ be the ratable value.

The ratable value of the flat is $96 000.

Question Solution

Class Work:

Q.P. 2.20 and Q.P.

2.21

PROPERTY TAX Payable by : Owners of property (if rented

out)

Tax amount= annual rental income × 80% × property tax rate

Property tax rate = 15% (in year 2012/13)

Note: annual rental income = actual income − rates the remaining 20% is deducted for the

allowance for “repair and outgoings”.

PROPERTY TAX (EXAMPLES AND CLASS WORK)

The owner of a flat pays a property tax of $7200 for a year. If the property tax is 15%, what is the monthly rental income of the flat?

Let $ be the monthly rental income of the flat.

The monthly rental income of the flat is $5000.

Question Solution

Class Work:

Q.P. 2.22 and Q.P.

2.23

SALARIES TAX Progressive tax :

more income → higher tax rate (%)

net chargeable income= annual income − allowances

Note: the annual income includes all income, including commissions (佣金 ), bonuses (花紅 ), leave pay (代替假期的工資 ) and end of contract gratuities (約滿酬金 )allowances (津貼 ), perquisites (額外賞賜 )and fringe benefits (附帶利益 ), etc…

SALARIES TAX RATES (2012-2013)

Net chargeable income Tax rate Tax ($)

On the First $40 000 2% 800On the Next $40 000 7% 2800On the Next $40 000 12% 4800

Remainder 17%

Progressive rates:

Standard rates:• Salary tax = annual income × 15%

(no allowance for standard rates)

Final result: the minimum of the two results.

SALARIES TAX ALLOWANCES (2012-13)

SALARIES TAX ALLOWANCES (2012-13)

PROGRESSIVE RATES OR STANDARD RATES ???

0 1,000,000 2,000,000 3,000,0000

50,000100,000150,000200,000250,000300,000350,000400,000450,000500,000

Allowance: $134500Allowance: $298500

Annual Income ($)

Sala

ries

Tax

($)

EXAMPLES AND CLASS WORK