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16.10.2017 01:49 Age: 2 days

Hong Kong to cut corporate taxation for small enterprises even lower


The Hong Kong government is to introduce a new 8.2 per cent rate of corporation tax on the first HKD2 million (USD255,000) of company profits.

The new rate - half that of the jurisdiction's existing base rate of corporation tax - was announced by its chief executive Carrie Lam last week, in an effort to 'reduce the burden on small and medium-sized enterprises'. It goes even further than the 10 per cent basic rate promised in Lam's election manifesto two years ago.

Additional profits beyond that level will continued to be taxed at the 16.5 per cent tax rate.
A 300 per cent tax deduction will also be offered on the first HKD2 million of eligible research expenditure, and 200 per cent for additional R&D costs.

Corporate groups can nominate only one subsidiary to benefit from the lower tax rate, to prevent abuse of the new rules.

A bill to implement the two initiatives will be submitted to the Legislative Council as soon as possible, said the Inland Revenue Department.

  • Hong Kong has gazetted a law enabling it to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and exchange financial account information under the OECD Common Reporting Standard. At the same time, it signed an agreement with Switzerland for the automatic exchange of financial account information in tax matters.

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Hong Kong to cut corporate taxation for small enterprises even lower