(Budget 2024-25) Hong Kong to raise tax rate for high earners

Hong Kong will increase tax on high earners to help bring down the city’s deficit.

Financial chief Paul Chan announced in his budget speech on Wednesday that a two-tier tax system will be introduced from April, with income of up to HK$5 million taxed at 15 percent, and anything higher than that being taxed at 16 percent. Previously tax for all individuals was capped at 15 percent.

The government said about 12,000 taxpayers will be affected generating a revenue of about HK$910 million each year. 

“Even with the two-tiered standard rates regime above in place, the new tax rates will still be lower than those of other advanced economies,” he said.

Chan also said the government will introduce legislative amendments in the first half of this year to implement the progressive rating system for domestic properties, with the new system only affecting domestic properties with rateable value over $550,000.

It is estimated that the system will contribute to an increase of about HK$840 million in government revenue annually.

Meanwhile, a 3 percent hotel accommodation tax will take effect on January 1, 2025, said Chan, with the move accounting for less than 1 percent of the total spending of overnight visitors.

The hotel accommodation tax is expected to add HK$1.1 billion to the public coffers each year.

Separately, Chan announced that business registration fees will go by HK$200 to HK$2,200 from April 1, which is expected to generate an additional HK$295 million for the government each year.