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The increase of tax allowance of Profits tax to MOP 600,000 in Fiscal Year 2014
  1. For the sake of assisting enterprises to cope with the difficulties and challenges arising from economic restructuring and in response to the internal and external economic environmental changes causing an instant acknowledgment of the difficult operating condition of the industry, the SAR government has been putting forward its utmost effort throughout these years to support the continuous and prosperous development of small-medium sized enterprises through the demand for taking an initiative approach to provide target measures and to launch tax incentive measures at appropriate stage.
  2. Based on the data of Profits Tax in fiscal year 2013, the total number of Profits Tax taxpayers was 56,820, of which the number of taxpayers in group A and group B were 4,193 and 52,627 respectively. If the tax allowance amount is extended from $32,000 to $600,000, the total number of taxpayers subject to tax payment will be significantly reduced from 44,819 to 1,911, of which the number of Group A taxpayers will be reduced by 41% and Group B taxpayers by 98%. From the perspective of tax revenue, assuming that the other conditions remain unchanged, the launching of $600,000 tax allowance will reduce the Profits Tax revenue from originally MOP 4.114 billion to 3.84 billion (i.e. about MOP 274 million less).
  3. Most importantly, the taxpayers benefited from tax allowance of $600,000 are mainly the Profits Tax Group B taxpayers. Since the majority of small-medium sized enterprises are from Group B taxpayers that also include emerging industries such as cultural, innovative and so forth, the measure and policy to grant the tax allowance of $600,000 is helpful and also appropriate to support the development of small-medium sized enterprises as well as emerging industries.
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