Hong Kong Tax Laws and Regulations

Hong Kong Tax Laws

Hong Kong is a special administrative territory in China, which has a separate political and economic system to the rest of the country. An investment-friendly climate with low levels of state intervention and an attractive tax system has made Hong Kong become the world’s seventh-largest trading entity as well one of the world’s most prominent financial hubs.

Dealing with tax matters is a major issue for companies seeking to develop an international presence, particularly as disciplinary measures can apply for non-compliance. We have made it our goal to keep track of the latest changes in the tax policies of Hong Kong to always ensure complete compliance.

Overview of Taxes in Hong Kong

• Individual Income Tax – 2% – 17% (Progressive)
• VAT – 0%
• Corporate Income Tax – 16.5%
• Social Security Contributions (Mandatory Provident Fund) – 5% (employee), 5% (employer)

Hong Kong Individual Tax – Single, Married

Any individual earning an income from Hong Kong must pay local taxes, regardless of their residential status. Income tax is not imposed on an individual’s total income. Instead, there are 3 types of income tax an individual can contribute to:

• Salaries Tax – income from employment, office, or pensions
• Profits Tax – income from business or trading profits
• Property Tax – rental income from immovable property

All individuals are subject to pay Income Tax, the most common being salaries tax. Income tax is to be paid by the individual in an annual tax return. Hong Kong’s income tax rates are progressive, depending on one’s annual income. It starts at 2%, with a maximum of 17%:

• HK$ 0 – 50,000 – 2%
• HK$50,000 – 100,000 – 6%
• HK$100,001 – 150,000 – 10%
• HK$150,000 – 200,000 – 14%
• Over HK$200,000 – 17%

Besides income tax, individuals in Hong Kong are also subject to pay for social security, which amounts to about 5% of their monthly income. Any earnings from capital interests are not taxed.

Individual tax returns are issued on the first working day of May of the following year and must be filed within a month of the issue date. Income Tax can be done separately according to the type of income earned or done as a “personal assessment” – where income chargeable to all three types of income tax are aggregated in a single assessment.

If an individual is married, they may choose to be taxed separately, or jointly with their spouse.

Filing tax returns can be done online with the Inland Revenue Department’s website via eTax, or in person. For tax-filling in Hong Kong, it is mandatory for a taxpayer to have an identity number – this could be with a Hong Kong ID Card, or in some cases (especially non-residents), your national identity number, to use for local tax services.