Hong Kong Tax Revenue Expected to Rebound After Decline in Last Financial Year

Hong Kong’s Tax Revenue Expected to Rebound After Dip in Financial Year

Hong Kong’s tax revenue took a hit in the last financial year, falling by HK$18.2 billion to HK$342 billion amid a slump in the stock and property markets. However, authorities are optimistic about a rebound in income as curbs on buying flats have been lifted.

Commissioner of Inland Revenue Tam Tai-pang projected a 12 per cent increase in tax revenue for the 2024-25 financial year. Factors such as the scrapping of property market cooling measures earlier this year and anticipated growth in salaries and GDP are expected to contribute to this resurgence.

Provisional figures from the Inland Revenue Department revealed a 30 per cent drop in stamp duty collection, from HK$70 billion to HK$49.1 billion in 2023-24. Commissioner Tam attributed this decline to the lackluster performance of the property and stock markets.

However, the outlook is more positive with a notable surge in property transactions following the abolition of demand-side management measures for residential properties. The recent stock market sentiment has also been described as “quite positive” by Tam.

Authorities ditched all property market cooling measures in February to help bolster the city’s fiscal health, leading to a doubling of home sales. Despite this surge, prices have yet to see a significant jump.

Although profits tax decreased by 2 per cent to HK$170.5 billion, government income from salaries tax increased slightly to HK$79.9 billion in the last financial year. The government estimated total tax revenue to reach HK$382.8 billion in 2024-25, including earnings from stamp duty and profits tax.

Hong Kong’s tax revenue faced a similar decline in the previous year, recording a HK$18.3 billion drop in 2022-23, along with a 30 per cent decrease in stamp duty payments. The anticipated rebound in income signals a positive turnaround for the city’s financial outlook.