Rates in Hong Kong

A property tax known as "rates" has been levied in Hong Kong since 1845. The tax applies to all domestic and commercial properties unless exempted, and is based upon the rental value of the property, re-assessed each year. Formerly part of the revenue went to the Urban Council and, from 1986, the Regional Council, but since 2000 the whole amount goes to the Hong Kong Government.

The valuation process is the responsibility of the Commissioner of Rating and Valuation, to whom appeals or objections may be submitted. Rates are paid quarterly in advance via the collection agency, Hongkong Post. The findings of various legal cases have clarified some aspects of rating law.

Unless specifically exempted under the Rating Ordinance (Chapter 116 of the Laws of Hong Kong), all properties in Hong Kong are liable to rating assessment, with rates payable at a specified percentage of the rateable value assessed on the property. Basically, the rateable value is the estimated market rental value of the property at a designated date.

The rating system in Hong Kong has a history of over 160 years. The first Rating Ordinance, Ordinance No. 2 of 1845, was enacted in that year and related to the Police Rate which was collected to pay the expenses for upholding and maintaining the police force in Hong Kong. Over the following thirty years, services funded by rating such as “Lighting Rate”, “Water Rate” and “Fire Brigade Rate”, were expanded by several subsequent Ordinances. The terms “tenement”, “rateable value” and “interim valuation”, which were re-enacted or introduced in the Rating Ordinance 1888, have remained central to rating law in Hong Kong since then.

Prior to 1931, different percentage charges of rates were imposed according to districts. In 1931 the Government recognised the unsatisfactory nature of the large number of different rates of charge. The absence or presence of amenities in certain localities should have been reflected in the rateable value of the property. Consequently, upon the enactment of Ordinance No. 16 of 1931, a uniform percentage charge of 17% of the rateable value was levied in all rated areas for the services provided by the Government. However, water was still seen to justify separate treatment with a fixed reduction of 1% in the rates percentage charge for premises with unfiltered water supply and 2% for premises with no fresh water supply. In 1984, the basis in calculating water reductions was changed. Reductions based on water supply status were to be calculated at a percentage prescribed by resolution of the Legislative Council of the amount of rates payable. With effect from 1 April 1984, the reductions were set at 7.5% and 15% for unfiltered water supply and no water supply respectively.

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