ENG-2007 — Page 103

The Economy 63

generous personal allowances under the Hong Kong tax law, only 37 per cent of the workforce had to pay salaries tax for the year of assessment 2005-06.

Owners of land or buildings in Hong Kong were charged property tax in 2006- 07 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. Properties owned by a corporation carrying on a business in Hong Kong are exempt from property tax, but profits derived from ownership are chargeable to profits tax. Property tax contributed some $1.2 billion (about 0.4 per cent of total revenue) in 2006-07.

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 was some $25.1 billion, about 9 per cent of total revenue, in 2006-07.

A duty is imposed on the gross profits on horse racing and football betting administered by the Hong Kong Jockey Club, and proceeds of Mark Six lotteries. These are the only legal forms of betting in Hong Kong. Effective from September 1, 2006, the duty on horse racing is charged at a sliding scale, starting from the rate of 72.5 per cent on the first $11 billion of the gross profits. The rate progressed to 73 per cent, 73.5 per cent, 74 per cent and 74.5 per cent for each segment of $1 billion of gross profits thereafter, up to 75 per cent on the remainder of gross profits exceeding $15 billion. 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 2006-07 totalled some $12 billion, about 4 per cent of total revenue.

Prior to its abolition on February 11, 2006, 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. Estates of persons who died during the period between July 15, 2005 and February 10, 2006 will be charged a nominal duty of $100, if the value exceeds $7.5 million.

In 2006-07, a hotel accommodation tax of 3 per cent was imposed on expenditure on accommodation by guests in hotels and guesthouses.

Under the Dutiable Commodities Ordinance, excise duties are levied on only four types of commodities to be consumed locally-hydrocarbon oil, liquor, methyl alcohol and tobacco, irrespective of whether they are manufactured locally or imported. The Customs and Excise Department is responsible for collecting these duties. In 2006-07, the department collected duties of $7 billion (about 2 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 values. In 2007-08, the rates percentage charge was 5 per cent.