2018-19 HONG KONG BUDGET HIGHLIGHT

28 February 2018

2018-2019 HONG KONG BUDGET HIGHLIGHT

The Financial Secretary, the Honourable Paul MP Chan, delivered the 2018-19 budget speech of the Government in the Legislative Council on 28 February 2018. The Financial Secretary proposed relief measures in various areas.

Highlights

The Hong Kong GDP growth for 2017 was 3.8% whilst the forecast for 2018 is 3%-4%
Total government revenue and overall expenditure for 2018-19 are estimated to be $604.5 billion and $557.9 billion respectively

Tax Relief Measures

In addition to the proposed implementation of the two-tiered profits tax rates system announced in the 2017 Policy Address by the Chief Executive which is applicable to corporations and unincorporated businesses under which the tax rates for the first $2 million profits will be lowered to 8.25% and 7.5% respectively, the Financial Secretary proposed the following tax relief measures starting from the year of assessment 2018-19:

Widen the tax bands for salaries tax from the current $45,000 to $50,000
Increase the number of tax bands from four to five, and adjust the marginal tax rates to 2%, 6%, 10%, 14% and 17% respectively
Increase the basic and additional child allowances from the current $100,000 to $120,000
Increase the dependant parent/grandparent allowance and additional dependant parent/grandparent allowance from the current $46,000 to $50,000 for age 60 or above, from the current $23,000 to $25,000 for age between 55 and 59
Raise the deduction ceiling for elderly residential care expenses from current $92,000 to $100,000
Introduce a personal disability allowance at a rate on par with the current disabled dependent allowance of $75,000

For the year of assessment 2017-2018 reduce profits tax, salaries tax and tax under personal assessment by 75%, capped at $30,000. Other Relief Measures include:-

Waive rates for four quarters of 2018-19, capped at $2,500 per quarter for each rateable property
Provide a one-off grant of $2,000 to each student in need
Raise the subsidy ceiling of the Continuing Education Fund (“CEF”) from $10,000 to $20,000 per applicant, also cover those who once opened a CEF account, and extend the upper age limit to 70
Tax deduction for the premium of the Voluntary Health Insurance Scheme, capped at $8,000 per insured person annually

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