The Economy 1 67
generous personal allowances under the Hong Kong tax law, only 36 per cent of the workforce had to pay salaries tax for the year of assessment 2003-04.
Owners of land or buildings in Hong Kong were charged property tax in 2004- 05 at the standard rate of 16 per cent of the actual rent received, less an allowance of 20 per cent for repairs and maintenance. There is a system of provisional payment of tax similar to that for profits tax and salaries tax. Property owned by a corporation carrying on a business in Hong Kong is exempt from property tax (but profits derived from ownership are chargeable to profits tax). Receipts from property tax accounted for about 0.5 per cent of total revenue, or about $1.1 billion in 2004-05.
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. The revenue from stamp duties accounted for about 7 per cent of total revenue, or about $15.9 billion, in 2004-05.
A duty is imposed on bets on horse racing administered by the Hong Kong Jockey Club, on proceeds of Mark Six lotteries and on gross profits of the Hong Kong Jockey Club's football betting operation the only legal forms of betting in Hong Kong. The rate of duty on betting proceeds from horse racing was 12 per cent on standard bets and 20 per cent on exotic bets in 2004-05. The duty on football betting, which was introduced on August 1 2003, is charged at a rate of 50 per cent of gross profits. The yield from betting duty in 2004-05 totalled some $12.1 billion, and accounted for about 5 per cent of total revenue.
In 2004-05, estate duty was imposed on estates valued at over $7.5 million, at levels ranging from 5 per cent to a maximum of 15 per cent. With the abolition of estate duty, the estates of people who died on or after 15 July 2005 are no longer subject to estate duty. A hotel accommodation tax of 3 per cent was imposed on expenditure on accommodation by guests in hotels and guesthouses.
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Under the Dutiable Commodities Ordinance, duties are levied on only four types of commodities hydrocarbon oil, liquor, methyl alcohol and tobacco, both locally manufactured and imported. The Customs and Excise Department is responsible for collecting these duties. In 2004-05, the department collected duties worth $6.6 billion or about 3 per cent of total revenue.
The Rating and Valuation Department is responsible for the billing and collection of rates, which are levied on landed properties at a specified percentage of their rateable value. In 2005-06, the rates percentage charge is 5 per cent.
The rateable value of a property is an estimate of its annual rent on the open market as at a designated date. In order to better reflect prevailing market rents, revaluation of rateable values is conducted on an annual basis. The current Valuation List took effect on April 1, 2005, with rateable values reflecting rental values on October 1, 2004.
The Valuation List as at March 31, 2005 contained about 2.2 million assessments. In 2004-05, the revenue from rates was $12.6 billion, accounting for about 5 per cent of total revenue.