It’s like this:
As a tax payer in Hong Kong, your tax deductible limit is HK$60,000 each year, and you can get tax deductible up to $10,200. Here is how.
This 60K can be the sum of Mandatory Provident Fund Tax Deductible Voluntary Contributions (MPF TVCs) and deferred annuity premiums.
Whether you make MPF TVCs of $60,000 or pay $60,000 of deferred annuity premiums, or make MPF TVCs and purchase a qualifying deferred annuity, you can still claim deductions under salaries tax and personal assessment up to 60K.
Below is an example.
TAX YEAR 2018/2019
HKD
(A) Total income of the year of assessment
(B) Allowances and Tax Deductions
-- Basic allowance
-- Mandatory contributions to approved retirement plans
-- Eligible extended annuity premium
Taxable income (A)-(B)
Tax payable
Under Old Tax System
$600,000
$132,000
$18,000
$450,000
$58,500 (C)
New Tax System with Tax Deduction
$600,000
$132,000
$18,000
$60,000
$390,000
$48,300 (D)
You can save up to (C) – (D) = $10,200 (or 17%) on tax
That’s how you would have saved more money for your retirement.
Feel free to find out more about our tax services.