2017/18 Budget measures
The Inland Revenue (Amendment) Ordinance 2017, which was enacted in June 2017, gave effect to the following individual tax measures proposed in the 2017/18 Budget:
- Widen the marginal tax bands to 45,000 Hong Kong dollars (HKD) from year of assessment 2017/18 onwards.
- Increase the disabled dependant allowance to HKD 75,000 from year of assessment 2017/18 onwards.
- Increase the dependent brother/sister allowance to HKD 37,500 from year of assessment 2017/18 onwards.
- Increase the deduction ceiling for self-education expenses to HKD 100,000 from year of assessment 2017/18 onwards.
- Extend the entitlement period for deduction for home loan interest to 20 years of assessment.
- Waive 75% of salaries tax and tax under personal assessment for 2016/17, subject to a ceiling of HKD 20,000, to be deducted from the taxpayer’s final tax payable for the year.
Automatic exchange of information (AEOI)
The Inland Revenue (Amendment) (No. 2) Ordinance 2017 was gazetted on 16 June 2017 with an effective date of 1 July 2017. It added 73 jurisdictions to the list of reportable jurisdictions for the purpose of AEOI in the Inland Revenue Ordinance and specified the first reporting year for each of the additional reportable jurisdictions. There are now 75 reportable jurisdictions in total for AEOI purposes.
Stamp duty rates on residential properties
The Stamp Duty (Amendment) Ordinance 2018 was gazetted on 19 January 2018. It increases the stamp duty rate on transfer of Hong Kong residential properties to a flat rate of 15%, with certain exemptions. One common exemption is the acquisition of residential property by a Hong Kong permanent resident who does not own any residential property at the time of acquisition. In this case, the applicable stamp duty ranges from a fixed amount of HKD 100 (for property consideration of up to HKD 2 million) to 4.25% of the consideration (for property consideration exceeding HKD 20 million). The 15% flat rate applies retrospectively from 5 November 2016 unless specifically exempted or provided otherwise.
Furthermore, the Stamp Duty (Amendment) (No. 2) Bill 2017 was gazetted on 26 May 2017. It seeks to tighten the situation where a flat rate of 15% is not applicable. Pursuant to the Bill, unless specifically exempted or otherwise provided, any instrument executed on or after 12 April 2017 for acquisition of more than one residential property under that instrument will be subject to stamp duty at a flat rate of 15%, even if the acquirer is a Hong Kong permanent resident who does not own any residential property in Hong Kong at the time of acquiring the multiple residential properties. Although the Bill has yet to be enacted, the proposed measure will apply retrospectively from 12 April 2017 when the related legislative amendments enter into force.