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Tax Measures Unveiled in The Policy Address 2018/19
 
Date: 12 Oct 2017

Tax Measures Unveiled in The Policy Address 2018/19



The Chief Executive of Hong Kong SAR, Mrs. Carrie Lam, delivered her first Policy Address on October 12, 2017. In the Policy Address, two tax related measures were proposed :
 
1. Two-tiered Profits Tax Rates Regime

To increase the competitiveness of Hong Kong in the world and to assist small and medium-sized enterprises (SMEs) in Hong Kong, the Chief Executive has proposed a two-tiered profits rates regime in 2018. She proposed that the first HK$2 million of profits earned by a company within the same group will be subject to a lower Profits Tax rate at 8.25%, i.e. half of the current Profits Tax rate 16.5%. To ensure that the tax benefits will target SMEs, restrictions will be introduced such that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.

The standard profits tax rate of 16.5% would remain unchanged for profits beyond HK$2 million.


2. Additional Tax Deduction for Research & Development (R&D) Expenditure

To encourage R&D investment by enterprises, the Chief Executive has proposed a 300% tax deduction for the first HK$2 million incurred in eligible R&D expenditure, with the remainder at 200%.











To increase the competitiveness of Hong Kong in the world and to assist small and medium-sized enterprises (SMEs) in Hong Kong,the Chief Executive has proposed a two-tiered profits rates regime in 2018. She proposed that the first HK$2 million of profits earned by a company within the same group will be subject to a lower Profits Taxrateat 8.25%, i.e. half of the current Profits Tax rate16.5%. To ensure that the tax benefits will target SMEs, restrictionswill be introducedsuch that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.
 
1.      Two-tieredProfits Tax Rates Regime
 
To increase the competitiveness of Hong Kong in the world and to assist small and medium-sized enterprises (SMEs) in Hong Kong,the Chief Executive has proposed a two-tiered profits rates regime in 2018. She proposed that the first HK$2 million of profits earned by a company within the same group will be subject to a lower Profits Taxrateat 8.25%, i.e. half of the current Profits Tax rate16.5%. To ensure that the tax benefits will target SMEs, restrictionswill be introducedsuch that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.
 
The standard profits tax rate of 16.5% would remain unchanged for profitsbeyond HK$2 million.
 
2.      Additional Tax Deduction for Research & Development (R&D) Expenditure
 
 
 
 
1.      Two-tieredProfits Tax Rates Regime
 
To increase the competitiveness of Hong Kong in the world and to assist small and medium-sized enterprises (SMEs) in Hong Kong,the Chief Executive has proposed a two-tiered profits rates regime in 2018. She proposed that the first HK$2 million of profits earned by a company within the same group will be subject to a lower Profits Taxrateat 8.25%, i.e. half of the current Profits Tax rate16.5%. To ensure that the tax benefits will target SMEs, restrictionswill be introducedsuch that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.
 
The standard profits tax rate of 16.5% would remain unchanged for profitsbeyond HK$2 million.
 
2.      Additional Tax Deduction for Research & Development (R&D) Expenditure
 
 
To encourage R&D investment by enterprises, the Chief Executive has proposed a 300%tax deductionforthe first HK$2 million incurred in eligible R&D expenditure, with the remainderat 200%.