Verified Facts
The tax rates in Hong Kong range from 2% to 17% for income tax, with a corporate tax rate of 8.25% for the first HKD 2 million of profits and 16.5% above that, and there is no value-added tax or goods and services tax, making it a relatively low-tax environment for individuals and businesses.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Hong Kong has a territorial taxation system, meaning that only income earned within the territory is subject to tax, and foreign-sourced income is generally not taxable. To be considered a tax resident in Hong Kong, an individual must have been physically present in the territory for more than 180 days in a tax year, or have been present for less than 180 days but have a permanent home in Hong Kong and have been a tax resident in the previous year. The tax year in Hong Kong runs from April 1 to March 31.
The tax system in Hong Kong is designed to be simple and efficient, with a low-tax environment to attract businesses and individuals. The government has implemented various measures to simplify the tax system and reduce compliance costs, including the introduction of electronic filing and payment systems. The Inland Revenue Department (IRD) is responsible for administering the tax system in Hong Kong, and provides a range of services and resources to help taxpayers comply with their tax obligations.
Personal Income Tax
| Income Bracket (HKD) | Tax Rate |
|---|---|
| 0 - 45,000 | 2% |
| 45,001 - 90,000 | 7% |
| 90,001 - 150,000 | 12% |
| 150,001 - 250,000 | 17% |
| above 250,000 | 17% |
| Personal income tax in Hong Kong is relatively low, with a progressive tax rate system and various deductions and allowances available to reduce taxable income. Taxpayers are required to file their tax returns by April 30 each year, and must pay any tax due by the same date. Deductions and allowances are available for expenses such as mortgage interest, charitable donations, and contributions to retirement schemes. |
Corporate & Business Tax
- The corporate tax rate in Hong Kong is 8.25% for the first HKD 2 million of profits and 16.5% above that.
- Small businesses with an annual turnover of less than HKD 40 million may be eligible for a profits tax exemption.
- Hong Kong has a number of free zones, including the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge, which offer tax incentives and other benefits to businesses.
- Companies must register with the IRD within 30 days of commencing business in Hong Kong.
- Companies are required to file their tax returns by April 30 each year, and must pay any tax due by the same date.
VAT / Sales Tax
- Hong Kong does not have a value-added tax (VAT) or goods and services tax (GST).
- There are no reduced rates or exemptions from tax, as there is no general sales tax in Hong Kong.
- Tourists are not eligible for a tourist refund scheme, as there is no sales tax to refund.
For Expats & Foreign Workers
- To be considered a tax resident in Hong Kong, an individual must have been physically present in the territory for more than 180 days in a tax year.
- Hong Kong has a network of double taxation treaties with over 40 countries, which can help to reduce tax liabilities for individuals and businesses.
- Expats and foreign workers may be eligible for a tax exemption on their foreign-sourced income, if they meet certain conditions.
- Social security contributions are not mandatory in Hong Kong, but employers and employees must make contributions to a Mandatory Provident Fund (MPF) scheme.
- Remittances of income earned in Hong Kong are subject to tax, but foreign-sourced income is generally not taxable.
- Expats and foreign workers may be eligible for a tax deduction on their mortgage interest payments, if they meet certain conditions.
Crypto & Investment Income
- Investment income, including dividends and interest, is subject to tax in Hong Kong, but there are no specific taxes on cryptocurrencies such as Bitcoin.
- Capital gains are not subject to tax in Hong Kong, unless they are derived from the sale of Hong Kong properties.
- Dividends received from Hong Kong companies are subject to a withholding tax of 0%, but dividends received from foreign companies may be subject to a withholding tax in the country of source.
- Tax losses can be carried forward to offset against future profits, but must be claimed within 3 years of the loss being incurred.