THE ECONOMY
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by reference to rents as at July 1, 1983. Having regard to the movement of rentals since the previous lists were prepared, the review resulted in considerably increased rateable values for almost all rated properties.
The percentage charges on rateable values are determined annually by resolution of the Legislative Council. Owing to the much higher values resulting from the revaluation, these charges were reduced effective from April 1, 1984. Currently, general rates are charged at 3.0 per cent and Urban Council rates at 2.5 per cent in the urban areas. The total rates in these areas are thus 5.5 per cent of rateable values. General rates of 5.5 per cent are charged in the New Territories. A relief scheme, which was extended and modified as from April 1, 1984, generally limits the amount of rates payable for a particular property in any year to 20 per cent above that payable in the previous year.
Rates are payable quarterly in advance and exemptions are few. However, the govern- ment generally provides financial assistance towards the payment of rates to educational, charitable and welfare organisations if the premises they occupy are being run in accordance with an approved target or policy. No refund of rates is allowed for vacant domestic premises but half of the rates paid may be refunded in the case of vacant non-domestic premises.
The taxes and duties making up the internal revenue, with the exception of air passenger departure tax and the cross-harbour tunnel tax, are collected by the Inland Revenue Department. These consist of betting duty, entertainment tax, estate duty, hotel accom- modation tax, stamp duty and earnings and profits tax.
Betting duty is imposed on bets on authorised totalisators and the proceeds of Mark Six Lotteries. The rate of duty is either nine per cent or 15 per cent depending on the type of bet placed, and is 30 per cent on the proceeds of lotteries.
Entertainment tax is imposed on the price of admission to cinemas and race meetings at rates which vary with the prices charged for admission. This averages about nine per cent in the case of cinemas and 30 per cent in the case of race meetings.
Estate duty is imposed on that part of a deceased's estate situated in Hong Kong. The rates of duty charged range from a minimum of 10 per cent on estates valued between $2 million and $2.5 million to a maximum of 18 per cent on estates valued in excess of $4 million. Estates valued at less than $2 million are exempt from duty.
Hotel accommodation tax of five per cent is imposed on expenditure on accommodation by hotel and guest-house guests.
The Stamp Duty Ordinance imposes fixed and ad valorem duties on different classes of documents relating to assignments of immovable property, leases and share transfers.
Earnings and profits tax is levied under the Inland Revenue Ordinance. Hong Kong has a schedular system of taxation whereby persons liable are assessed and required to account for tax on four separate and distinct sources of income, namely business profits, salaries, property and interest. Personal assessment is a form of aggregation superimposed upon the schedular system. The standard rate of tax has been increased from 15 per cent to 17 per cent with effect from the year of assessment commencing on April 1, 1984.
Profits tax is charged only on profits arising in, or derived from, Hong Kong from a trade, profession or business carried on in Hong Kong. Profits of unincorporated businesses are taxed at 17 per cent whereas profits of corporations are taxed at 18.5 per cent. Assessable profits are determined on the actual profits for the year of assessment. The tax is paid provisionally on the basis of profits of the year preceding the year of assessment. As in many countries, profits assessable to profits tax in Hong Kong are the net profits. Generally, all expenses incurred in the production of assessable profits are deductible,