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.