Increased Tax Income in Hong Kong by 10 Percent, Mainly Attributed to Immigration of Skilled Workers and Surge in Real Estate Transactions
Hong Kong's Tax Revenue Surges: Breaking Down the 10% Increase
Hong Kong's 2024-25 financial year saw a whopping 10% jump in tax revenue, reaching a breathtaking HK$374.5 billion (US$48.3 billion). Commissioner of Inland Revenue, Benjamin Chan Sze-wai, forecasts another 7% rise for the 2025-26 financial year.
The Inland Revenue Department recently disclosed these provisional figures, which show an increase of HK$32.5 billion from HK$342 billion in the previous financial year.
A close look at the numbers reveals that income from salaries tax, representing 24% of the total revenue, climbed an impressive 11% from HK$79.9 billion to HK$88.9 billion.
Chan attributes this growth to a twofold reason: a hike in the number of taxpayers and their surging income levels. The increase in taxpayers is partly due to government initiatives aimed at enticing talent to the city.
Digging Deeper into the Tax Boom
While specific reasons behind the 10% increase in tax revenue remain elusive, certain factors can potentially contribute to this trend.
- Economic Vitality: Hong Kong's economy has demonstrated a robust growth, with real GDP rising by 3.1% in the first quarter of 2025 compared to the previous year. A flourishing economy often translates into higher business profits and salaries, which can fuel increased tax revenues.
- Pro-Tax Measures: Despite introducing one-off tax concessions for the year of assessment 2024/25, these perks are capped and designed to benefit a wide taxpayer demographic. However, their impact on overall revenue might be minimal, considering the strong economic growth.
- Streamlined Tax Filing: The Hong Kong Inland Revenue Department's efforts to enhance electronic tax filing capabilities can indirectly boost revenue by enhancing filing efficiency, reliability, and accuracy. This, in turn, potentially reduces tax evasion instances.
Unveiling the exact factors responsible for the 10% surge in tax revenue requires comprehensive analysis of Hong Kong's economic indicators and the impact of tax policies. The preliminary figure for Hong Kong's overall tax revenue in the fiscal year 2024-25 stands at 374.5 billion Hong Kong dollars.
In 2024, the projected increase in business profits and salaries due to Hong Kong's economic growth could attract higher income collections, potentially contributing to the 10% rise in overall tax revenue. The pro-tax measures introduced for the tax year 2024/25, despite being capped and intended for a wide demographic, might have a limited impact on overall revenue due to strong economic growth. Additionally, streamlined tax filing processes, aimed at enhancing efficiency, reliability, and accuracy, could indirectly attract more taxpayers and decrease tax evasion instances, potentially augmenting future tax revenue collections.
