What are Rates?
Rates are one of Hong Kong's indirect taxes levied on properties. The revenue collected forms part of the Government's general revenue. Rates are payable quarterly in advance.
Rates are charged at a percentage of the rateable value which is the estimated annual rental value of a property at a designated valuation reference date, assuming that the property was then vacant and to let.
For the Financial Year 2021-2022, the rates percentage charge is 5%. The designated valuation reference date is 1 October 2020 and the rateable values take effect from 1 April 2021.
Liability for Assessment
Generally, properties in all parts of Hong Kong are liable to be assessed to rates under the Rating Ordinance (Cap. 116).
Responsibility for Payment of Rates
Both the owner and the occupier are liable for rates. In practice, this will depend on the terms of the agreement between the owner and occupier of the premises. In the absence of any agreement to the contrary, liability for rates rests with the occupier.
What is Rateable Value?
Rateable value is an estimated annual rental value of a property at a designated valuation reference date, assuming that the property was then vacant and to let from year to year, on the basis that the tenant undertakes to pay all usual tenant’s rates and taxes, whilst the landlord undertakes to pay the Government rent, the costs of repairs and insurance and any other expenses necessary to maintain the tenement to a state to command that rent.
In assessing the rateable value, reference is made to other open market rents agreed at or around the date of valuation, for similar properties in the locality, with due adjustments to reflect any differences in size, location, facilities, standards of finish and management. Restrictions on sale or letting, such as those that apply to Home Ownership Scheme flats, and the financial status of the ratepayer, will not be taken into account.
The rateable values of all types of properties, including private and public housing, are assessed on the same basis. This provides a fair and uniform base on which to charge rates in accordance with the open market rental values of properties.
Annual Revaluation of Rateable Value
The rateable values will be reviewed annually in the general revaluation so as to reflect more precisely changes in market rental values of properties. Rental levels for different types of properties and for properties in different locations change over time by varying amounts due to many factors, including economic, social and demographic changes. The purpose of a general revaluation of all properties is to redistribute the total rates liability fairly amongst ratepayers according to the prevailing rental levels of the properties they occupy. It is not intended to increase rates revenue.
Objections to Rateable Value Under the Rating Ordinance
Under the Rating Ordinance, any aggrieved person can serve on the Commissioner of Rating and Valuation a "proposal" to alter an entry in a new Valuation List or an "objection" against a correction, deletion or addition to an existing Valuation List.1. Proposal
Following a general revaluation, a new Valuation List is declared by the Commissioner in the month of March and is made available for public inspection up to 31 May of the same year. Any person who is aggrieved by an entry in the Valuation List may object to the new rateable value by submitting a "Proposal" in the specified form (Form R20A) on or before 31 May of the year.i. Grounds of Submitting Proposal
The person making the proposal must be aggrieved on one of the following grounds:
- that a tenement for which he is liable to pay rates has been valued above its proper rateable value;
- that a tenement included in a Valuation List ought to be omitted therefrom;
- that a tenement which ought to be included in a Valuation List has been omitted therefrom; or
- that a tenement included in a Valuation List has been valued below its proper rateable value.
Proposal (Form R20A) may be served by post or in person at the Department's Office. Members of the public may also submit their proposal (Form e-R20A) by using the "Electronic Submission of Forms" service provided at the Department's website. Service by fax will not be accepted.iii. Notice of Decision
Upon receiving a valid proposal, the Commissioner will review the assessment and may confirm or alter the entry in the Valuation List. The decision must be issued before 1 December of the year in which a new List comes into force.
Whenever the Commissioner issues a notice of alteration to a Valuation List by way of a correction, a deletion or an interim valuation, an aggrieved owner or occupier may, within 28 days after the service of the notice by the Commissioner, serve on the Commissioner a notice of objection in the specified form (Form R23A/B/C). The Commissioner does not have the discretion to accept late objections.i. Grounds of Submitting Objection
The objection must be made on one of the following grounds:
- the proposed correction is wrong;
- the tenement to be deleted ought not to be deleted; or
- the tenement which is subject to an interim valuation is valued above its proper rateable value or is not liable for assessment to rates.
Notice of Objection (Form R23A/B/C) may be served by post or in person at the Department's Office. Members of the public may also submit their objection (Form e‐R23A/B/C) by using the "Electronic Submission of Forms" service provided at the Department's website. Service by fax will not be accepted.iii. Notice of Decision
After reviewing an objection, the Commissioner may confirm, vary or set aside the interim valuation, the deletion or the correction to the Valuation List. The Commissioner is required to issue decisions on the objections within 6 months after the expiration of the 28-day objection period.3. No Suspension of Payment upon Objection
Even if a proposal or an objection is lodged, rates and/or Government rent must be paid as demanded and late payments will be subject to a surcharge. If the rateable value is amended as a result of the proposal or objection, the alteration will be backdated to the relevant date the rateable value takes effect and adjustment to the rates and/or Government rent will be made in subsequent demands.4. Appeal
A person on whom a Notice of Decision has been served may, if still unsatisfied with the Commissioner's decision on the proposal or objection, lodge an appeal with the Lands Tribunal within 28 days of the service of the Notice of Decision. A fee is payable on lodging the appeal.
Forms used for appeals and advice on appeal procedures may be obtained from the Lands Tribunal at:
Lands Tribunal Building|
38 Gascoigne Road
Tel. No.: 2771 3034
Please refer to the Government Rent section under Our Services for details.
The current provisions for exemption from liability for rates take two forms:
- Exemption from assessment to rates - no assessment will appear in the Valuation List; and
- Exemption from payment of rates - an assessment is included in the Valuation List but is exempt from payment of the rates by administrative means.
The general rationale for granting rates exemptions can be divided into a number of broad categories: social (e.g. cemeteries and crematoria), administrative (e.g. premises below a prescribed rateable value), political (e.g. premises occupied by consulates and the military) and historical (e.g. certain village houses in the New Territories).
The statutory provisions under which tenements are exempted from assessment to rates are contained in Section 36(1) of the Rating Ordinance. Exemption from payments of rates is provided for by virtue of the Rating (Miscellaneous Exemptions) Order under Section 36(2) and (3) of the Rating Ordinance.