The Financial Secretary delivered the 2018/19 Hong Kong Budget on February 28, 2018. It is the first budget delivered by the current Administration since their appointment in July 2017.
The 2018/19 budget proposes considerable changes to salaries tax, the most significant ones being (1) widening the marginal tax bands from HK$45,000 to HK$50,000, (2) increasing the number of tax bands from four to five and (3) adjusting the progress tax rates of the corresponding tax bands.
Other proposed changes include increases in various personal allowances and concessionary deduction, and introduction of new allowance and deductions, e.g., tax deductions for voluntary contributions to Mandatory Provident Fund (MPF), the purchase costs of deferred annuity products and the qualified premiums paid by a person for himself/herself and his/her dependents under the Voluntary Health Insurance Scheme (VHIS). These proposals will reduce the tax burden of salaries taxpayers and help encourage more people to opt for private healthcare services and plan for their retirement in view of the aging population in Hong Kong.
Similar to last year, a salaries tax rebate for 2017/18 is proposed as a one-off relief measure for individual taxpayers amid another year of higher-than-expected estimated fiscal surplus of HK$138 billion for 2017/18. Companies which have settled the 2017/18 salaries tax liabilities for their former assignees/expatriates who have already departed from Hong Kong should ensure the refunds in relation to the tax rebate are made available to the companies instead of the individual employees.
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