2023-24 Budget – Tax Measures

In his 2023-24 Budget, the Financial Secretary proposed the following measures:

Reducing profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 (The relevant legislation for the tax reduction was passed by the Legislative Council and gazetted on 28 April 2023.)
Increasing child allowance (The relevant legislation for the tax measure was passed by the Legislative Council and gazetted on 28 April 2023.)
Providing tax deduction for spectrum utilisation fees (This measure can only be implemented after completion of the relevant legislative process.)
Increasing tax deduction for voluntary contributions made by employers to the Mandatory Provident Fund for employees aged 65 or above (This measure can only be implemented after completion of the relevant legislative process.)
Adjusting the value bands of ad valorem stamp duty at Scale 2 rates (This measure can only be implemented after completion of the relevant legislative process.)
Imposing special football betting duty (This measure can only be implemented after completion of the relevant legislative process.)

Highlights of the measures and implementation details are set out in the following paragraphs. Answers to frequently asked questions (FAQ) and illustrative examples showing how the proposed measures would reduce taxpayers’ salaries tax and tax under personal assessment are also provided.

You may use the Tax Calculator provided in GovHK to calculate your salaries tax and tax under personal assessment.

Reducing profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23

The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a ceiling of $6,000 per case. The relevant legislation for the tax reduction was passed by the Legislative Council and gazetted on 28 April 2023.

For profits tax, the ceiling of the tax reduction is applied to each business. For salaries tax, the ceiling is applied to each individual taxpayer; but for married couples jointly assessed, the ceiling is applied to each married couple (i.e. capped at $6,000 in total). For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If a taxpayer elects for personal assessment jointly with his/her spouse, the tax reduction is capped at $6,000 for the married couple.

The tax reduction is not applicable to property tax. Individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.

A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he/she would get if he/she was not assessed under personal assessment. The exact position will need to be evaluated case by case.

To elect for personal assessment, eligible taxpayers should complete Part 7 of his/her tax return for individuals (BIR60) for the year of assessment 2022/23. Individuals having salaries income only, but no business profits and rental income, need not elect for personal assessment.

The reduction will reduce taxpayers’ amount of tax payable for the year of assessment 2022/23. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2022/23 as usual. The Inland Revenue Department will effect the reduction in the final assessment. For any final assessment for the year of assessment 2022/23 issued before the enactment of the law, the Inland Revenue Department will make a reassessment. Taxpayers are not required to make any applications or enquiries to the Department.

The tax reduction will only be applicable to the final tax for the year of assessment 2022/23, but not to the provisional tax of the same year. Therefore, taxpayers are still required to pay their provisional tax on time despite the reduction measure. The provisional tax paid will be applied to pay the final tax for the year of assessment 2022/23 and the provisional tax for the year of assessment 2023/24. Excess balance, if any, will be refunded.

Increasing child allowance

The Financial Secretary proposed to increase child allowance starting from the year of assessment 2023/24. The basic child allowance for each child and the additional child allowance for each child born during the year of assessment will both increase from the current $120,000 to $130,000. After the increase, the total allowance for a child born during the year of assessment will be $260,000, and the allowance for each subsequent year will be $130,000. The relevant legislation for the tax measure was passed by the Legislative Council and gazetted on 28 April 2023.

The Inland Revenue Department will automatically apply the new level of child allowances in calculating the provisional salaries tax for the year of assessment 2023/24. Taxpayers are only required to complete their tax returns for the year of assessment 2022/23 and claim the child allowance and they do not need to make separate applications. Please refer to FAQ 10 to 12 and Example 3 for details.

Providing tax deduction for spectrum utilisation fees

The Financial Secretary proposed to provide tax deduction for the spectrum utilisation fees to be paid by the future successful bidders of radio spectrum. This measure can only be implemented after completion of the relevant legislative process.

Increasing tax deduction for voluntary contributions made by employers to the Mandatory Provident Fund for employees aged 65 or above

The Financial Secretary proposed to increase the tax deduction for voluntary contributions made by employers to the Mandatory Provident Fund for employees aged 65 or above from the current 100 per cent to 200 per cent. This measure can only be implemented after completion of the relevant legislative process.

Adjusting the value bands of ad valorem stamp duty at Scale 2 rates

The Financial Secretary proposed to adjust the value bands to which the ad valorem stamp duty at Scale 2 rates apply. The Government will introduce the Stamp Duty (Amendment) Bill 2023 (the Bill) into the Legislative Council to take forward the proposed adjustment. To enable property purchasers to benefit from the measure as soon as possible, the Chief Executive has made the Public Revenue Protection (Stamp Duty) Order 2023 (the Order) under the Public Revenue Protection Ordinance (Cap. 120) to give full force and effect of law to the Bill before its enactment. Pursuant to the Order, the new value bands will be applicable to any instrument for residential or non-residential property transaction executed at 11 am on 22 February 2023 or thereafter that is subject to the ad valorem stamp duty at Scale 2 rates despite that the Bill is pending the scrutiny by the Legislative Council. Please refer to ad valorem stamp duty and the relevant FAQ for details. This measure can only be implemented after completion of the relevant legislative process.

Imposing special football betting duty

The Financial Secretary proposed to impose an annual special football betting duty of $2.4 billion on the Hong Kong Jockey Club under the Betting Duty Ordinance (Cap. 108) for 5 years starting from 2023-24 while the current betting duty rates remain unchanged. This measure can only be implemented after completion of the relevant legislative process.