PUBLIC FINANCE AND TAXATION
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four separate taxes. In each case the amount levied is limited to tax on specified income or profits arising in, or derived from, the Colony. The standard rate of tax for the 1955-6 year of assessment is 12%, a rate which has remained unchanged since 1950-1.
The four separate taxes are:
(1) Profits Tax (sub-divided into a Corporation Profits Tax and a Business Profits Tax), charged at the standard rate on all companies or businesses operating in the Colony. In the case of unincorporated businesses, no tax is payable provided their profits do not exceed $7,000. Otherwise tax is payable in full on all Hong Kong profits.
(2) Salaries Tax, charged on all individuals in receipt of income from employment. This is charged at graduated rates, ranging from one-fifth of the standard rate on the first $5,000 of net chargeable income, to double the standard rate on net chargeable income exceeding $45,000. In arriving at net chargeable income the following allowances are first deducted:
(a) Personal allowance-$7,000.
(b) Allowance for wife-$7,000.
(c) Child allowance ranging from $2,000 for the first
child to $200 for the ninth child.
The maximum charge, however, is limited to tax at the standard rate on the total assessable income without the deduction of any allowances.
(3) Interest Tax, charged at the standard rate on most interest payments. It is normally collected from the payer of the interest, who deducts it at source from the interest paid.
(4) Property Tax, charged at half the standard rate on the net rateable value of all land and buildings in the Colony.
As an alternative to these separate taxes a resident may elect to be personally assessed on his total Hong Kong income. A single assessment is then made by allowing similar allowances and charging similar rates of tax as in the case of the Salaries Tax. A set-off is then allowed for any of the four separate taxes already paid.