The Government will introduce a two-tier profits tax system to enhance Hong Kong's competitiveness.
Delivering her 2017 Policy Address today, Chief Executive Carrie Lam said the Government demonstrates greater determination in the taxation policies, and strives to implement the new tax system within 2018.
Under the plan, the tax rate for the first $2 million of profits of enterprises will be lowered to 8.25%, or half of the standard profits tax rate.
Profits of over $2 million will continue to be subject to the standard tax rate of 16.5%.
To ensure the tax benefits target small and medium enterprises, Mrs Lam said the Government will impose restrictions. Each group of enterprises can only nominate one enterprise to benefit from the lower tax rate.
To encourage enterprises to invest in research and development, Mrs Lam proposed the first $2 million eligible R&D expenditure will enjoy a 300% tax deduction with the remainder at 200%.
