2017 Hong Kong Policy Address -Tax Updates
The Chief Executive of HKSAR, Mrs. Carrie Lam, delivered the 2017 Policy Address speech of the Government in the Legislative Council on 11 October 2017.
The Policy Address outlines plans to boost Hong Kong’s economy through efforts in various areas, including land supply, talent, government-to-government business, policy directions, investment, business-friendly environment and tax measures.
In terms of taxation, the Chief Executive proposed the following two new tax relief measures:
- A new two-tier profits tax system, under which the profits tax rate for the first HK$2 million of profits of enterprises will be lowered to 8.25% (i.e. half of the standard profits tax rate). Profits above HK$2 million will continue to be subject to the standard profits tax rate of 16.5%. To ensure that such tax measure will benefit targeted small and medium enterprises, certain restrictions will be introduced such that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.
- To encourage enterprises in Hong Kong to carry out research and development (“R&D”) activities, the first HK$2 million of eligible R&D expenditure will enjoy a 300% tax deduction and 200% for the remainder.
A bill to implement the above two tax initiatives will be submitted to the Legislative Council as soon as possible.
For further information or advice concerning the above or any advice with respect to Hong Kong taxation, please contact David Cho at firstname.lastname@example.org, Henry Fung at email@example.com, Candice Ng at firstname.lastname@example.org or call +852 2806 3822.