TAXATION IN HONG KONG
Mr. Leung Wing Chung
TAXES COLLECTED BY INLAND REVENUE
DEPARTMENT (稅務局) (2010-11)
Type of tax Chinese
Salaries tax
Profits tax
Property tax
Personal assessment
薪俸稅
利得稅
物業稅
個人入息課稅
(combination of the three taxes above)
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 Chinese
Rates 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)
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)
Question

The ratable value of a
flat is $80 000. If the
rates are charged at
5% p.a., find the rates
payable per quarter.
Solution
Rates payable per quarter
1
= $80 000 × 5% ×
4
= $1000
quarter
Annual Rates
Class Work:
RATES (EXAMPLES AND CLASS WORK
)
Q.P. 2.20 and
Question

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?
Solution
Q.P. 2.21
Let $𝑟 be the ratable value.
1
𝑟 × 5% × = 1200
4
1
𝑟 = 1200 ÷ 5% ÷
4
= 96 000
∴ The ratable value of the
flat is $96 000.
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”.
Work:
PROPERTY TAXClass
(EXAMPLES
AND CLASS WORK)
Question

Q.P. 2.22 and
Q.P. 2.23
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?
Solution
Let $𝑟 be the monthly rental
income of the flat.
𝑟 × 12 × 80% × 15% = 7200
𝑟 = 7200 ÷ 12 ÷ 80% ÷ 15%
= 5000
∴ The monthly rental income of
the flat is $5000.
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)
Progressive rates:
Net chargeable income
On the First $40 000
On the Next $40 000
On the Next $40 000
Remainder
Tax rate
2%
7%
12%
17%
Tax ($)
800
2800
4800
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 ???
500,000
450,000
Salaries Tax ($)
400,000
350,000
300,000
250,000
Allowance: $134500
200,000
Allowance: $298500
150,000
Standard Rates
100,000
50,000
0
0
1,000,000
2,000,000
Annual Income ($)
3,000,000
EXAMPLES AND CLASS WORK