Hong Kong budget 2024-25: which high earners are going to be forking out more on salaries tax?
- City leader John Lee is the only government official set to contribute extra to public coffers under finance chief’s plan to introduce two-tiered standard rates tax regime
- MTR Corp executives, finance industry leaders and Hong Kong’s former ‘King of Employees’, Canning Fok, will also surpass HK$5 million tax threshold
Hong Kong’s leader, real estate tycoons, university heads and executives at some of the city’s largest companies are in line to pay additional income tax announced as part of the finance chief’s budget speech on Wednesday.
Financial Secretary Paul Chan Mo-po said authorities hoped to introduce a two-tiered standard rates tax regime on salaries, covering some of the city’s wealthiest individuals, in the coming financial year.
Under the new measure, residents will pay a standard rate of 15 per cent for the first HK$5 million (US$638,792) of net income, before going up to 16 per cent for anyone who surpassed that amount.
The tax is currently calculated at a standard rate of 15 per cent or progressive rates ranging between 2 per cent and 17 per cent of a taxpayer’s net income, according to whichever figure is lower.
Chan said the shake-up would affect 0.6 per cent of the city’s taxpayers, or about 12,000 people, and generate an extra HK$910 million each year in public revenue.
A government source said 30,000 Hong Kong residents were currently paying the 15 per cent standard rate, describing the HK$5 million cap as a “reasonable” threshold that balanced the need to expand public coffers while preserving the city’s competitive tax policies.
According to another insider, a taxpayer who had two children, who could contribute to the child allowance, would need to earn at least HK$5.7 million a year before being charged the 16 per cent standard tax rate.
But the city’s new tax rates would still be lower than those in other locations, such as Japan at 55.9 per cent, the United Kingdom at 45 per cent and Singapore at 24 per cent, the source added.
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City leader John Lee Ka-chiu, prominent tycoons and finance sectors are among those likely to be hit by the higher income tax rates, according to publicly available information on their income, before allowances.
Lee, with an annual income of HK$5.42 million in 2022, is the only government official set to pay the additional income tax and will fork out an extra HK$4,200 annually under the new policy.
Chief Secretary of Administration Eric Chan Kwok-ki, who earns HK$4.82 million a year, narrowly missed the mark, alongside Secretary for Justice Paul Lam Ting-kwok and finance chief Chan, who respectively took home HK$4.5 million and HK$4.66 million last year.
Hong Kong Monetary Authority CEO Eddie Yue Wai-man will need to pay an extra HK$53,000 in taxes based on his earnings of HK$10.3 million last year.
In comparison, Julia Leung Fung-yee, the chief executive of the Securities and Futures Commission, earned HK$8.71 million last year and could pay out HK$37,000 extra from tax.
Canning Fok Kin-ning of CK Hutchinson, previously known as the “King of Employees”, raked in an average monthly salary of HK$17 million in 2022, or HK$204 million per annum.
The coming tax regime will see him handing over an extra HK$2 million, on top of the HK$30 million he pays under standard rates.
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New World Development chairman Henry Cheng Kar-shun is also expected to make the cut, with an income of HK$60.3 million for the year ending 30 June 2023. His son Adrian Cheng Chi-kong earned HK$52.8 million over the same period.
According to PCCW ’s annual report, acting group managing director Susanna Hui Hon-hing earned HK$52.7 million in 2022 and will have to pay an extra HK$477,000 in income taxes.
The MTR Corporation’s own annual report showed at least eight of the rail giant’s executive directors earned more than HK$5 million in 2022, with CEO Jacob Kam Chak-pui making HK$16.8 million that year.
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Prominent staff at local universities will also need to contribute more to public coffers.
The Chinese University of Hong Kong’s financial report for last year showed 19 faculty members took home more than HK$5 million. The biggest earner listed in the document was paid between HK$8.1 million and HK$8.5 million a year.
Over at the University of Hong Kong, 22 staff who earned more than HK$5 million that year made the cut. The highest-paid staffer raked in somewhere between HK$7.8 million and HK$7.95 million.
