On 26 February 2020, the Financial Secretary Paul Chan Mo-po announced the 2020/21 budget outlining the Hong Kong SAR Government’s plan for the economy and proposals for taxation developments. He proposed the following tax concessionary measures, all of which require legislative amendments before implementation.

Reducing profits tax for the year of assessment 2019/20:

The Financial Secretary proposed a one-off reduction of profits tax for the year of assessment 2019/20 by 100%, subject to a ceiling of $20,000 per case.  This measure will be effected by amending the Inland Revenue Ordinance. For profits tax, the ceiling of the tax reduction is applied to each business.

The proposed reduction will reduce taxpayers’ amount of tax payable for the year of assessment 2019/20.  Taxpayers should file their profits tax returns for the year of assessment 2019/20, as usual.  Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment.  For any final assessment for 2019/20 issued before the enactment of the law, the Inland Revenue Department will make a reassessment after the enactment.  Taxpayers are not required to make any applications or enquiries to the Department.

The proposed tax reduction will only be applicable to the final tax for the year of assessment 2019/20, but not to the provisional tax of the same year.  Therefore, taxpayers are still required to pay their provisional tax on time despite the proposed reduction.  The provisional tax paid will be applied to pay the final tax for the year of assessment 2019/20 and the provisional tax for the year of assessment 2020/21.  Excess balance, if any, will be refunded.

Waiving business registration fees for 2020-21:

The Financial Secretary proposed to waive business registration fees for one year, starting from 1 April 2020.  The Government will introduce the relevant legislative amendment into the Legislative Council as soon as possible to effect the measure.