Hong Kong will slash salaries tax and profits tax by 75 percent up to a maximum of HK$20,000 (US$2,580) in the current financial year, the government said Wednesday.
The salaries tax reduction will benefit 1.82 million taxpayers and reduce government revenue by HK$15.8 billion.
The government will forgo HK$1.9 billion in profit tax after the cut aimed at easing the burden on 130,000 businesses.
Basic and additional child allowances will go up to HK$100,000 from HK$70,000 in the next financial year starting April 1, cutting government revenue by HK$2 billion a year.
The tax cuts were announced by Financial Secretary John Tsang in his annual budget.
Also, Tsang unveiled one-time waivers for rate payers for the first two quarters of 2015-2016, subject to a ceiling of HK$2,500 per quarter for each rateable property.
Recipients of comprehensive social security assistance, old age allowance, old age living allowance and disability allowance will receive an increase equal to two months of the respective allowances.
The government will pay a month’s rent for lower income tenants of Hong Kong Housing Authority flats and Hong Kong Housing Society units.
Tsang said the HK$34 billion relief package is aimed at easing the financial burden on the public, stimulating consumption, stabilizing the economy and boosting employment.
Together with other measures, the relief package will have the fiscal stimulus effect of boosting gross domestic product by one percentage point, he said.
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