Legislative Council Passes Revenue Bill 2004
(Source : Government Information Centre)
The Legislative Council passed the Revenue Bill 2004 on May 12. The Bill seeks to implement two revenue-related measures announced in the 2004-05 Budget.
The first measure is to extend the entitlement for home loan interest deduction under salaries tax and personal assessment from five to seven individual years of assessment.
The second measure is to extend the scope of deduction for research and development expenses under profits tax to cover design-related expenses.
The concession in relation to home loan interest deduction will take effect from the 2003/04 year of assessment and is estimated to cost government revenue of $4.6 billion over the next five years. The concession on research and development expense deduction will take effect from the 2004/05 year of assessment and is estimated to cost $30 million in a full year.
Legislative Amendments for 2003/04
The following legislative amendments related to profits tax apply to the year of assessment 2003/04 and subsequent years: -
The profits tax rate for corporations is increased to 17.5%. For unincorporated businesses, the profits tax rate is increased to 15.5% for the year of assessment 2003/04 and to 16% for the year of assessment 2004/05.
The ceiling for tax deductible charitable donations is increased to 25% of the assessable profits.
Sums such as royalties [caught by section 15(1)(a) or (b)] to non-resident persons
The rate of deeming assessable profits for certain payments made to non-resident persons, such as royalties and licence fees, is increased to 30%. This new deeming rate applies to sums received by or accrued to non-resident persons on or after 1 April 2003.
Qualifying debt instruments (QDIs)
Trading profits and interest income derived from QDIs issued on or after 5 March 2003 with an original maturity of less than 7 years but not less than 3 years are chargeable to tax at a concessionary rate, being 50% of the normal tax rate.Trading profits and interest income derived from QDIs issued on or after 5 March 2003 with an original maturity of not less than 7 years are exempt from profits tax.
Companies Ordinance (Amendment) 2003
The Companies (Amendment) Ordinance 2003, which was passed by the Legislative Council on 2 July 2003, has come into operation on 13 February 2004, except clause 67 [sections 158C(1)(a) and (b)] which will become operative at a later stage. For details, please refer to the Companies Registry External Circular No. 1/2004