ENG-1976 — Page 66

FINANCIAL STRUCTURE

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A further feature of the Inland Revenue Ordinance is the right of a taxpayer to elect for what is known as Personal Assessment. This aggregates his income from the four sources mentioned earlier and gives him the benefit of the same personal allow- ances and sliding scale of tax as would be allowed for Salaries Tax purposes. Tax paid on the individual sources of income is allowed to be set-off.

It is estimated that the taxes on earnings and profits will yield $2,428 million in the financial year 1976-7.

Estate Duty is imposed on that part of a deceased person's estate which is situated in Hong Kong. The estate value exemption limit is $300,000. The rate of duty varies from six per cent on estates valued between $300,000 and $400,000 to 18 per cent on those in excess of $3 million. The yield for the year 1976–7 is estimated at $62 million.

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Stamp Duty imposes fixed duties on certain classes of documents and ad valorem duties on others. The estimated yield from Stamp Duty for the year ended March 31, 1977 is $420 million.

Entertainments Tax is charged on the prices of admission to race meetings and cinemas. The tax is charged at varying rates depending on price of admission, averag- ing approximately 22 per cent in the case of race meetings and 10 per cent in the case of cinemas. The estimated yield for 1976-7 is $22 million.

Betting Duty is imposed on bets made on authorised totalisators or pari-mutuels, on the proceeds of lotteries conducted by the Hong Kong Lotteries Board, and on contributions towards authorised cash sweeps. The duty on bets is charged at either 74 per cent or 11 per cent, depending on the type of bet placed, and on cash sweep contributions and proceeds of lotteries it is 25 per cent. The duty on bets and sweeps is recovered from the Royal Hong Kong Jockey Club which holds the monopoly for conducting such operations, including a limited form of off-course betting. The estimated yield for the year ending March 31, 1977 is $180 million.

Hotel Accommodation Tax is imposed on hotel and guest house accommodation and is levied at the rate of four per cent on the accommodation charges (three per cent in 1975-6). For the financial year 1976–7, this tax is estimated to yield $14 million.

Business registration is compulsory for every company incorporated in Hong Kong, every overseas company with a place of business in Hong Kong and every business operating in Hong Kong-except those carried on by charitable institutions. The annual registration fee is $150 but exemption from payment of the fee is granted where the business is small. The total income from registration fees, service fees for copy documents and other fees for the financial year 1976–7 is expected to be $29 million.

In June, the third Inland Revenue Ordinance Review Committee began its sittings to consider the system of taxation of profits and other forms of income. It accepted written submissions from organisations and members of the public who wanted to express their views on taxation matters within the committee's terms of reference. These included the system of voluntary aggregation under personal assessment, the taxation of husbands and wives, the treatment of dividends and its relation to the