The Hong Kong Inland Revenue Department released the 2021/22 tax revenue information on June 1, and the overall tax revenue for the whole year has increased by 14% compared with the previous year. The increase was mainly due to profits tax and gaming tax, which has increased by 23% and 22% respectively, Yet, these figures are the exact opposite of what the general public expected. Why does this situation occur?
The increase in gambling tax makes it easier for everyone to understand: the epidemic is related to social distancing measures, since everyone has less time to go out to play and more time at home. Gambling has become the easiest entertainment to participate in.
The increase in profits tax may be due to the following reasons: 1. Due to social distancing measures, many social gatherings and entertainment activities have been stopped, expenses in activities has reduced; in addition, business travel activities have also stopped, which also reduced the expenses;
2. Everyone may think that the income in 21/22 will be lesser, so there is no need to have tax plan prepared. When the final figures come out, it is greater than expected, since there are lack of preparation, you have to pay larger tax bill.
Therefore, no matter the market situation is good or bad, it is necessary to prepare a tax plan every year. when the market conditions are good, the tax burden can of course be legally reduced; if the market conditions are not good, the losses can also be carried forward to future years to offset future profits. Therefore, a good tax plan is necessary for any market conditions.
Of course, tax planning or tax reduction must be done in a legal way, otherwise it will lead to additional taxes, fines or imprisonment, which will ultimately outweigh the gains. If you have any questions about tax, or want to make a tax plan, please feel free to contact us.
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