2. What are the current rates for salaries tax?
 
Tax rates for the year of assessment 2006/07 (also applicable to Personal Assessment):
Net chargeable income
(Total Income – Deductions – Allowances) |
Progressive rate |
on the first $30,000 |
2% |
on the next $30,000 |
7% |
on the next $30,000 |
13% |
Remainder/balance |
19% |
Net total income (Total Income – Deductions) |
Standard rate: 16% |
Note: For 2006/07, 50% of the salaries tax or tax under personal assessment would be waived (subject to the maximum of $15,000 per case). Taxpayers do not need to make any application. They only need to file their Tax Returns - Individuals for 2006-07, and the Inland Revenue Department will effect the waiving in the final assessments for 2006-07 after verification. Salaries tax bills with the waiving will be issued from late July onwards. The tax payable will normally fall due in January 2008. Please also note that t he marginal rates of Salaries Tax for the year of assessment 2007/08 have been reduced (please click here for further details).
Salaries Tax is chargeable on your net chargeable income at progressive rate OR your net total income at standard rate, whichever is the lesser . Base on the above table, progressive rate is more advantageous to people with relatively lower income. On the other hand, standard rate will give more concession to people earning relatively higher income (since progressive rate will charge 19%, but not 16%, on the income after the first $90,000).
Please go to the next question for an illustration of how to compute salaries tax.
For more details on tax rates, you may also refer to the Inland Revenue Department's "Allowances, Deductions and Tax Rate Table" .
|