The Hong Kong Inland Revenue Department, on Friday, 31 May, 2024, announced a change in the rate of interest payable on Tax Reserve Certificates in a legal notice published in the Government Gazette.
The notice includes a reduction in the annual rate of interest payable on Tax Reserve Certificates. From 3 June, 2024, the new annual rate of interest will be 0.8833% against the current rate of 0.9250%, i.e. the new rate will be HKD 0.0736 per month per HKD 100.
Tax Reserve Certificates bear simple interest, and interest is calculated monthly (including part of a month) from the date of purchase to the date of payment of tax. Interest is only credited when certificates are used to pay tax; no interest is due when the principal value of a certificate is repaid to its holder.
The rate of interest payable on Tax Reserve Certificates is periodically revised in line with the market trend. Currently, it is reviewed every month based on the average prevailing interest rate for the 12-month time deposit for HKD 100,000 to HKD 499,999 offered by the three note-issuing banks.
The new rate applies to all certificates purchased on or after 3 June, 2024.
Certificates purchased before 3 June, 2024, will continue to earn interest at the rates prevailing on their respective purchase dates:
- For certificates purchased on or after 3 January, 2023, and before 6 March, 2023: 0.5833% per annum.
- For certificates purchased on or after 6 March, 2023, and before 3 April, 2023: 0.7500% per annum.
- For certificates purchased on or after 3 April, 2023, and before 5 June, 2023: 0.7667% per annum.
- For certificates purchased on or after 5 June, 2023, and before 7 August, 2023: 0.8083% per annum.
- For certificates purchased on or after 7 August, 2023, and before 4 September, 2023: 0.8833% per annum.
- For certificates purchased on or after 4 September, 2023, and before 3 June, 2024: 0.9250% per annum.
- For certificates purchased on or after 3 June, 2024, until further notice: 0.8833% per annum.
Interest on Tax Reserve Certificates is always subject to the general rule that interest ceases to accrue after 36 complete months.
