Environmental Protection Department
Businesses that implement environmentally-friendly facilities will get an accelerated tax deduction, a measure aimed at encouraging the business community to use them.
The proposal was contained in the Revenue Bill 2008 gazetted yesterday. Subject to the Legislative Council’s passing of the Bill, amendments will be made to the Inland Revenue Ordinance.
Eligible facilities include environmental protection machinery and environmental protection installations.
Environmental protection machinery includes low noise construction machinery or plants registered under the Quality Powered Mechanical Equipment system the Environmental Protection Department administers, as well as waste treatment, wastewater treatment and air-pollution control machinery, or a plant in compliance with the requirements under the department-administered ordinances.
The capital expenditure incurred on the provision of eligible machinery will qualify for a 100% deduction under profits tax in the year of purchase.
Environmental protection installations include renewable energy installations, such as solar photovoltaic installations, wind turbine installations and thermal waste treatment installations. Other eligible installations are the energy efficient building installations registered under the Hong Kong Energy Efficiency Registration Scheme for Buildings the Electrical & Mechanical Services Department administers.
The capital expenditure incurred on the construction of eligible installations will qualify for a 20% deduction under profits tax in each of the five consecutive years starting from the year of acquisition.
After the amendments to the IRO are enacted, taxpayers may claim the deductions in their profits-tax returns for 2008-09 and subsequent years of assessment.
A taxpayer who has owned and been using environmental protection machinery or installations before the proposal’s implementation proposal may elect to have the reduced value of the machinery under the depreciation allowance regime fully deducted in 2008-09. In the case of installations, the owner may have 20% of the residual value of the installations deducted in each of the five consecutive years starting from 2008-09.