Hong Kong Tax Revenues Surpass HKD200bn

About HKD200.7 billion in revenue was collected by the government in the 2007-08 fiscal year, up 29% on the previous year, according to the territory's Inland Revenue Department.

Announcing the figures on 5th May, Commissioner of Inland Revenue Alice Lau said total earnings grew 16% to HKD133.7 billion, with profits tax up 27% to HKD91.4 billion, salaries tax down 3% to HKD37.5 billion and property tax up HKD15 million to HKD4.8 billion. While stamp duty surged 106% to HKD51.6 billion and betting duty grew 8% to HKD13.1 billion, estate duty fell 55% to HKD353 million.

The department issued more than 1.97 million individual tax returns last Friday, with the deadline falling on 2nd June. To encourage online filing of tax returns all eTAX users filing their tax returns online will have the deadline extended to 2nd July. The deadline for sole proprietors of unincorporated businesses is 2nd August.

The eTAX service has recently been upgraded, enabling users to have their e-return data saved in their personal computers. The system has also been updated with the tax concessions proposed in the 2008-09 Budget so taxpayers, when filing their returns online, will know the amount of tax payable in the coming bill after the tax concessions.

This year's Budget proposed a 75% tax cut for 2007-08, subject to a ceiling of HKD25,000 per case. Salary earners should complete this year's tax return as usual and no application is needed for the tax cut.

Mrs Lau said: "Individuals with rental or business income will enjoy such a reduction whether they elect personal assessment or not. However, the amount of reduction they get might be different when assessed under each type of tax or personal assessment. The exact position will need to be evaluated case by case.

"Individuals having business and rental income and eligible for personal assessment may make such an election in their tax returns. The department will check whether the personal assessment election will reduce the amount of tax payable and assess each taxpayer to their advantage."

Other tax relief measures for 2008-09 include raising personal allowances, widening tax bands, lowering the standard rate and corporate profits tax rate, raising the deduction ceiling for charitable donations and accelerating tax deductions for capital expenditure on environment-friendly facilities.

The law amendment process has been initiated. After enactment of the legislation the department will effect the 2007-08 tax cut in this year's tax bills, and will automatically apply the new allowances, tax rates and bands in calculating the 2008-09 provisional tax.

To encourage more generous charitable donations to support disadvantaged groups the Budget proposed the deduction ceiling for approved charitable donations be raised to 35% of the taxpayer's income. If a taxpayer makes a generous donation of one third of his income, the amount will still be fully deductible for tax purposes.

Mrs Lau said audits on donation claims will be bolstered to guard against abuse. Only donations made to tax-exempt charities are tax deductible. A list of these tax-exempt charities can be found on the Inland Revenue Department's website. Donation receipts should be kept for seven years and submitted for the department's scrutiny when called for.