Wallis Wang

Tax revenues were down HK$18.2 billion last year, with stamp duty dropping 30 percent on fewer property transactions and a sluggish stock market, says the chief tax collector, who adds he remains “cautiously optimistic” about a rebound this year.

The tax collection was HK$342 billion in the 2023-24 fiscal year ending March 31 – some 5 percent lower than the previous year – the Inland Revenue Department said yesterday as it began issuing nearly 2.5 million individual tax returns.

Commissioner of inland revenue Tam Tai-pang said the drop in total tax revenues was caused by a reduction in stamp duty and profits tax.

Stamp duty totaled HK$49.1 billion – down 30 percent or HK$20.9 billion from HK$70 billion the previous year.

Profits tax was down 2 percent to HK$170.5 billion, Tam said, citing the drop in Hong Kong’s gross domestic product in 2022.

But Tam said the government is confident that profits tax will increase as GDP is recovering and authorities are attracting more tourists to Hong Kong.

He said there was a slight 0.5 percent increase in salaries tax over the past year to HK$79.9 billion.

”The salaries tax revenue increased because of various reasons, including a stable employment rate,” Tam said. “The unemployment rate also stayed at a low level while taxpayers were seeing higher incomes.”

The department expects a continuous increase in the labor force, especially after the government launched talent schemes to attract nonlocal workers, which will facilitate salaries tax revenue, he said.

Tam said the government is optimistic about the 2024-25 fiscal year and expects tax revenue to rise 12 percent to HK$382.8 billion.

He also predicted that stamp duty will rebound to HK$71 billion – a 45 percent increase.

”Both stock and property markets remained sluggish over the past fiscal year so stamp duty remained low,” Tam said.

”But the number of property transactions has significantly increased since the government scrapped the [spicy] measures in February.

”We saw a huge increase in the number of stamping applications in April. We are not overly optimistic – but we remain cautiously optimistic.”

Tam added the outlook for the stock market has also improved recently, which may also lead to an increase in stamp duty revenue.

The Inland Revenue Department issued 2.44 million tax returns yesterday, with 670,000 taxpayers receiving digital versions and 1.77 million receiving paper forms within one to two days, Tam said.

Taxpayers must file their returns by June 3 while sole proprietors of unincorporated businesses can file by August 2. Those who submit tax returns online are allowed a one-month extension.

Tam also warned the public to stay alert to scam e-mails pretending to be from the department.

He said the department will not include hyperlinks in e-mails requesting taxpayers to provide their personal, bank account or credit card data.

wallis.wang@singtaonewscorp.com

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