Hong Kong’s Inland Revenue Department encourages Online Tax Return Filing

In order to encourage online filing of tax returns, Hong Kong’s Inland Revenue Department has made an announcement that an automatic one-month extension will be granted to all e-filers.

On May 5, Alice Lau, Commissioner of Inland Revenue, said that 2.08 million individual tax returns are being sent out by the department and reminded that taxpayers must file their returns on time. She said that the deadline falls on June 4, however eTAX users filing their returns online will get a deadline extension – they will have an opportunity to file the returns until July 4.

The deduction ceiling for approved charitable donations has been raised to 35% of the taxpayer’s income, therefore the Inland Revenue department will enhance audits on donation claims with a view to detect abuse.

It is worth noting that during 2008-2009, USD 24 billion in revenue was collected, which is an increase of USD 1.1 billion on the previous financial year.

Filed under: Taxation

Tax Reductions gazetted in Hong Kong

On April 30, 2009, Hong Kong’s Inland Revenue (Amendment) Bill 2009 was officially gazetted.

On May 13, this bill was introduced into the Legislative Council. After that, the tax reduction will be reflected in the taxpayer’s final tax payable for 2008-2009.

The Inland Revenue (Amendment) Bill will allow a one-off reduction of 50% on salaries tax and tax under personal assessment for 2008-2009, subject to a ceiling of USD 774.

This measure had been announced by the HK Financial Secretary in the 2009-2010 Budget.

According to the estimations, the proposal will cost the Hong Kong’s government about USD 529 million in 2009-2010.

Filed under: Taxation

HK gazettes Double Tax Agreement with Vietnam

Hong Kong’s 5th comprehensive agreement for double taxation avoidance was gazetted on April 30, 2009. This was a tax treaty with Vietnam.

Any Hong Kong income tax paid by Vietnam residents or companies will be allowed as a credit against any tax payable in respect of the same incomes in Vietnam, under this tax agreement.

The withholding tax on royalties derived in Vietnam will be capped at 7% where payments are made for patent, design, model, plan, secret formula or process.

As to the withholding tax on interest derived in Vietnam, it will be reduced from the current 10% to 0% if the recipient is the Hong Kong Government, the HKMA or other mutually agreed recognized institutions.

After both sides have completed their ratification procedures, the agreement will come into force.

Filed under: HK as a Financial Centre

Relief Package launched by HK Airport Authority

Hong Kong’s Airport Authority has launched a USD 58 million relief package in order to assist airlines and other operators at Hong Kong International Airport whose business has been affected by the global economic downturn.

The relief package consists of USD 32 million interest-free payments and USD 25 million worth of reductions in charges.

Until the end of 2009, airlines that operate at the airport are offered a 10% reduction in landing and parking charges. Also, 50% of rental payments for airline lounges, offices, counters and storage can be deferred for up to 1 year and repaid by interest-free installments from April 2010 and on.

Filed under: Business and Economy