The Government welcomed the passage of the Inland Revenue (Amendment) (Tax Concessions and Two-tiered Standard Rates) Bill 2024 by the Legislative Council today.

The bill gives effect to the Government's proposals announced in the 2024-25 Budget and the 2023 Policy Address, which includes reducing salaries tax, tax under personal assessment and profits tax for the 2023-24 year of assessment by 100%, subject to a ceiling of $3,000 per case.

Starting from the 2024-25 year of assessment, the Government will allow an additional deduction ceiling amount of $20,000 for home loan interest or domestic rents, on top of the $100,000 basic deduction ceiling, for a taxpayer if specified conditions are met.

Such conditions include that the taxpayer should reside with his/her newborn child in Hong Kong for a continuous period of not less than six months, or a shorter period that the Commissioner of Inland Revenue considers reasonable in the circumstances, the Financial Services & the Treasury Bureau said.

It also noted that each taxpayer may be allowed an additional deduction ceiling amount for a maximum of 19 years of assessment. 

The Government will also implement a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the 2024-25 year of assessment.

In calculating the amount of salaries tax or tax under personal assessment at standard rates, the first $5 million of net income will continue to be subject to the standard rate of 15%, while the portion exceeding $5 million will be subject to the standard rate of 16%, the bureau explained.

Secretary for Financial Services & the Treasury Christopher Hui said the one-off tax concessions will benefit about 2.06 million taxpayers chargeable to salaries tax and tax under personal assessment, as well as about 160,000 tax-paying businesses.

Meanwhile, he pointed out that the additional deduction ceiling amount for home loan interest and domestic rents will benefit all taxpayers meeting the specified conditions, alleviating their financial burden of housing.

On the proposed two-tiered standard rates regime, Mr Hui indicated that it is expected to bring about an additional revenue of $905 million per annum for the Government, affecting only 0.6% of taxpayers.

“We believe that it will not have an adverse impact on Hong Kong's tax competitiveness and attractiveness to talent," he added.

The bill as passed will be published in the Government Gazette on May 31.

The bureau further stated that the one-off tax concessions will be reflected in taxpayers' final tax payable for the 2023-24 year of assessment.

Moreover, it made it clear that in calculating the provisional salaries tax for the 2024-25 year of assessment, the Inland Revenue Department will determine the amounts of home loan interest and domestic rents to be allowed based on the information provided by eligible taxpayers, and apply the two-tiered standard rates as appropriate.