Hong Kong Chief Executive, Mrs Carrie Lam, delivered her maiden Policy Address a while ago and the following tax changes have been proposed:
– To provide tax relief to the SMEs, the profits tax rate for the first HK$2M of profits to be lowered to 8.25% and thereafter the profits exceeding that amount would continue to be subject to HK Profits Tax at 16.5%. Only one enterprise nominated by each business group will be eligible for the lower tax rate.
– To encourage R&D investment by enterprises, a 300% tax deduction for the first HK$2M eligible R&D expenditure is proposed, with the remainder at 200%
– Increase the total number of comprehensive avoidance of double taxation agreements to be signed with other tax jurisdictions to 50 in the next few years.
Dear Valued Clients and Friends
Mr. John Tsang, the Financial Secretary of Hong Kong Special Administrative Region, has just delivered the Budget for the financial year 2012-13 today.
According to Mr. Tsang, for 2012-13, there will be a small deficit in the Consolidated Account but will largely achieve a fiscal balance. The estimated government revenue will be HK$390.3 billion. On the other hand, operating expenditure for the coming year is estimated to be HK$315 billion, which represents a 6% increase over the revised estimate for 2011-12. Recurrent expenditure will be HK$264.3 billion whereas capital expenditure will be HK$78.7 billion. Total estimated government expenditure for the coming year is forecast to be HK$393.78 bullion. The government’ fiscal reserves are estimated at $658.7 billion by the end of the following financial year, representing approximately 34% of GDP or equivalent to 20 months of government expenditure. In terms of the economic highlight, the forecast GDP growth is 1–3% and the headline inflation rate is estimated at 3.5%.
Continue reading Snapshots of Hong Kong Budget 2012-2013 delivered on 1 February 2012