Hong Kong uses massive fiscal surplus to spur innovation and alleviate taxes
Hong Kong recently announced record-breaking fiscal surplus of 138 billion HKD from the 2017-18 fiscal year. This is mostly thanks to high revenue from profits tax, land sales, stamp duties and salaries tax. Last year was indeed exceptional for the Asia’s world city, as its economy grew by 3.8% and unemployment rate reached a 20-year low of 2.9%.
Two-tiered Profits Tax Rates Regime in Hong Kong
A two-tiered profits tax rates regime was proposed by the Hong Kong Government during the last quarter of 2017 and the relevant Inland Revenue (Amendment) (No.7) Bill 2017 (the "Bill") was gazetted and introduced to the Legislative Council early this year. Subject to the enactment of the legislation, the two-tiered tax rates will apply starting from the year of assessment 2018/19 (i.e. 1 April 2018 to 31 March 2019). The salient features of the new tax regime are as follows: