The Budget for 2016/17 was presented to the Legislative Council by the Financial Secretary on 24 February 2016. The Financial Secretary proposed a one-off reduction of profits tax for the year of assessment 2015/16 by 75%, subject to a ceiling of $20,000 per case. For profits tax, the ceiling of the tax reduction is applied to each business.
The proposed tax reduction will only be applicable to the final tax for the year of assessment 2015/16, 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 2015/16 and the provisional tax for the year of assessment 2016/17. Excess balance, if any, will be refunded.
To promote Hong Kong as an intellectual property trading hub in the region, the Government will expand the scope of tax deduction for capital expenditure incurred for the purchase of intellectual property rights from five categories to eight. The additions are layout-design of integrated circuits, plant varieties and rights in performance. The amendments will apply from 1 April 2016.
