Hong Kong raises tax on high income earners for first time in 20 years

This unexpected step is intended to reduce the lack of budgetary funds.

Source:https://www.bloomberg.com/news/articles/2024-02-28/hong-kong-hikes-tax-rate-for-high-earners-to-16-to-pare-deficit?srnd=homepage-asia&embedded-checkout=true

A two-tier tax system will be introduced from April: income up to $640,000 will be taxed at a maximum rate of 15%, and anything above that will be taxed at 16%. Currently the rate for all individuals is 15%.

The move will affect about 12,000 people, or about 0.6% of taxpayers.

The deficit for the year ending March 31 is forecast at HK$101.6 billion, almost double the estimate a year ago.

The last time Hong Kong raised its general payroll tax rate was in 2003, when it was increased to 16%. The rate was lowered to 15% from 16% in 2008 after the city reported a record budget surplus. The city has no GST or capital gains tax.