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Hong Kong Tax Budget 2014/15 Maintaining Hong Kong as an attractive tax jurisdiction for business in Asia

Financial Secretary John Tsang delivered his second budget speech on 26 February 2014.

ECONOMIC PERFORMANCE

The revised forecast predicts a HK$12 billion surplus for the year 2013/14, well ahead of the forecast deficit of HK$4.9 billion. Land sales, stamp duty and profits tax remain the major sources of revenue.

A modest improvement in the economy is forecast with GDP growth of 3 to 4 percent for 2014.

The 2014 headline inflation rate is estimated at 4.6 percent.

FINANCIAL SERVICES

The government has announced a wide range of proposal to promote the finance sector, including:-

Proposes to issue inflation-link bond worth up to HK$10 billion with maturity of three years.

Proposes to waive stamp duty for trading of all exchange trade funds.

TAX CONCESSIONS AND ONE-OFF MEASURES

The Financial Secretary remains the profits tax rates unchanged for 2014/15. However, tax concessions and one-off benefits would be continued in 2014/15, including:-

A reduction in salaries tax and tax under personal assessment for 2013/14 of 75 percent, subjects to ceiling of HK$10,000.

A reduction in profits tax for 2013/14 of 75 percent, subject to ceiling of HK$10,000.

An increase in maintaining dependent parent or grandparent allowance.

A waiver of rates for the first two quarters of 2014/15, subjects to a ceiling of HK$1,500 per quarter.

INFRASTRUCTURE

Capital expenditure for 2014/15 will be HK$86 billion, exceeding around HK$70 billion of last year, including:-

Assisting the Airport Authority Hong Kong to press ahead with planning for a three runway system.

As for railways, a total cost of more than HK$10 billion are under construction.

As for the management of municipal solid waste, the government will invest about HK$30 billion in waste recycling and treatment facilities.

HOUSING

Residential property prices have more than doubled since 2008, the government would keep on execute cooling measures to avoid property bubble, including:-

The 2014/15 land sales program includes 34 residential sites capable of providing 15,500 units.

To increase housing land supply with a view to achieve the target of providing 470,000 residential flats in the next 10 years.

For further information, please contact Mr. Kenneth Young, international contact director for our firm in Hong Kong on kyoung@aitia-cpa.com.hk. You can also visit our firm profile and our website www.aitia-cpa.com.hk.

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