ENG-1954 — Page 58

HONG KONG ANNUAL REPORT, 1954

Earnings and Profits Tax

This tax which is a substitute for the more orthodox type of income tax was first imposed by the Inland Revenue Ordinance (now Cap. 112) in 1947. It falls into four separate taxes, brief details of which are given below. In each case the amount levied is limited to tax on the specified income or profits, arising in or derived from the Colony. The standard rate of tax for the 1954/55 year of assessment is 121%; this rate has remained unchanged since 1950/51.

The four separate taxes are as follows:-

(1) Profits Tax (sub-divided into Corporation Profits Tax and Business Profits Tax), which is charged at the standard rate on all companies or businesses carrying on business in the Colony. In the case of unincorporated busi- nesses no tax is payable if the profits do not exceed $7,000.00. Otherwise tax is payable in full on all Hong Kong profits.

(2) Salaries and Annuities Tax which is charged on Hong Kong residents in respect of income from employment. This tax is charged at graduated rates, ranging from one-fifth of the standard rate on the first $5,000.00 of net chargeable income to double the standard rate on net chargeable income exceeding $45,000.00. In arriving at net chargeable income the follow- ing allowances are first deducted-

(a) Personal allowance-$7,000.00 (b) An allowance for a wife-$5,000.00

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