ENG-2019 — Page 91

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The Economy

dividends received from corporations are exempt from profits tax. In 2018-19, the profits tax collected was about $166.6 billion, making up about 28 per cent of total government revenue.

Salaries tax is charged on emoluments arising in or derived from Hong Kong. As with profits tax, a provisional tax mechanism is in place. Salaries tax is calculated at progressive rates on the net chargeable income, which is income less deductions and allowances. In 2018-19, the first, second, third and fourth segments of net chargeable income of $50,000 each were taxed at 2 per cent, 6 per cent, 10 per cent and 14 per cent respectively, and the remainder at 17 per cent. No one, however, need to pay more than the standard rate of 15 per cent of their total income after deductions.

The earnings of husbands and wives are reported and assessed separately. However, where the deductions and allowances of either spouse exceed that spouse's income, or when separate assessments would result in an increase in their total salaries tax payable, the couple may elect to be assessed jointly. Salaries tax contributed some $60.1 billion, or about 10 per cent, of total government revenue in 2018-19. Because of generous personal allowances under the tax law, only 1.87 million people, or 49 per cent of the workforce, were liable to salaries tax for the 2017-18 year of assessment.

Owners of land and buildings are charged property tax at the standard rate, of 15 per cent in 2018-19, on the actual rent received after 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 locally are exempt from property tax, but the profits it derives from the properties are chargeable to profits tax. Property tax contributed some $3.6 billion, or about 1 per cent, of total government revenue in 2018-19.

Stamp duty is imposed on different classes of documents relating to transfers of immovable property, leases and transfers of shares under the Stamp Duty Ordinance. In 2018-19, the revenue from stamp duties was some $80 billion, or about 13 per cent of total government

revenue.

Betting duty is charged on the net stake receipts from betting on horse races and football matches and on the proceeds of Mark Six lotteries, all administrated by the Hong Kong Jockey Club. The yield from betting duty in 2018-19 totalled some $22.2 billion, or 3.7 per cent of total government 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 (5 per cent in 2019-20). The rateable value of a property is an estimate of its annual open market rent at a designated date. Rateable values are reviewed each year to better reflect prevailing market rents. The current Valuation List, containing about 2.5 million assessments, took effect on 1 April 2019, with rateable values reflecting rental values on 1 October 2018. The revenue from rates in 2018-19 was $17.2 billion, or 2.9 per cent of total government revenue.

The Rating and Valuation Department is also responsible for the billing and collection of government rent for properties held under land leases granted on or after 27 May 1985, or on

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