The Hong Kong Inland Revenue Department announced that the Legislative Council has passed legislation to implement specific measures from the 2024-25 Budget on Wednesday, 22 May, 2024. These measures include a two-tiered standard rates regime for salaries tax and tax under personal assessment.

The Bill gives effect to the Government’s proposals announced in the 2024-25 Budget and the 2023 Policy Address, which include:

  1. Implementing a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. In calculating the amount of salaries tax or tax under personal assessment at standard rates, the first HKD 5 million of net income will continue to be subject to the standard rate of 15% while the portion exceeding HKD 5 million will be subject to the standard rate of 16%;
  2. reducing salaries tax, tax under personal assessment, and profits tax for the year of assessment 2023/24 by 100%, subject to a ceiling of HKD 3,000 per case; and
  3. allowing an additional deduction ceiling amount of HKD 20,000 for home loan interest or domestic rents, on top of the basic deduction ceiling (HKD 100,000), for a taxpayer if specified conditions (including the taxpayer should reside with his/her newborn child in Hong Kong for a continuous period of not less than six months, or a shorter period that the Commissioner of Inland Revenue considers reasonable in the circumstances) are met starting from the year of assessment 2024/25. Each taxpayer may be allowed an additional deduction ceiling amount for a maximum of 19 years of assessment.

The one-off tax concessions will be reflected in taxpayers’ final tax payable for the year of assessment 2023/24. Moreover, in calculating the provisional salaries tax for the year of assessment 2024/25, the Inland Revenue Department will determine the amounts of home loan interest and domestic rents to be allowed based on the information provided by eligible taxpayers, and apply the two-tiered standard rates as appropriate.

The Bill will be published in the gazetted on 31 May, 2024.