HK Budget 2024-25: A Closer Look At The Tax Reforms

• Published date: 14 March 2024
• Law Firm: Withers LLP
• Author: Deirdre Kit Yun Fu, Daniel Tang and Katie Graves

Just over a year has passed since Hong Kong lifted the last COVID-19 measures, but the city is still facing challenges in recovering its economy to pre-COVID levels. External factors such as a complex geopolitical situation and high interest rates have added to the difficulties, alongside sluggish economic growth and a quiet property market.

Against this backdrop, Hong Kong's Financial Secretary, Mr. Paul Chan, delivered the 2024-25 Budget Speech on 28 February 2024, outlining several new measures aimed at revitalizing the city's economy. In this article, we will highlight the major tax-related measures which may impact high net worth individuals, fund managers, investment funds, family investment holding vehicles and property investors.

Two-Tiered Standard Rates for Salaries Tax and Personal Assessment

Boosting public revenue is one of the focuses of the Budget. In accordance with the "affordable users pay" principle, the government has proposed a two-tiered standard rate regime for salaries tax and tax under personal assessment.

Currently, employees are charged income tax on a progressive system, starting at 2 percent and ending at 17 percent, or at a standard rate of 15 percent on net income, whichever is lower.

With the introduction of a two-tiered standard rate regime, the first HK$5 million of net income will continue to be subject to the...