In his Budget for 2020/2021 delivered February 26, Hong Kong Financial Secretary Paul Chan proposed the
package of measures to stimulate economic activity that requires legislative amendments before its implementation. It includes a one-off reduction of profits tax for the year of assessment 2019/20 by 100 %, subject to a ceiling of HKD 20,000 per case.
Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment. For any final assessment for 2019/20 issued before the enactment of the law, the Inland Revenue Department will make a reassessment after the enactment. Taxpayers are not required to make any applications or enquiries to the Department.
The proposed tax reduction will only be applicable to the final tax for the year of assessment 2019/20, but not to the provisional tax of the same year. Therefore, taxpayers are still required to pay their provisional tax on time despite the proposed reduction. The provisional tax paid will be applied to pay the final tax for the year of assessment 2019/20 and the provisional tax for the year of assessment 2020/21. Excess balance, if any, will be refunded.
