Hong Kong’s tax system is known for its efficiency and simplicity, making it a top choice for businesses in the region. With low tax rates and a streamlined approach that eliminates many tax types, calculating tax liabilities is relatively easy. Hong Kong companies also enjoy various tax deductions and exemptions, especially for those conducting business overseas. Additionally, Hong Kong companies benefit from various tax deductions and exemptions, particularly those engaged in international business activities.
In this guide, we will simplify the complexities of Thailand’s personal tax framework by offering comprehensive overviews of:
- Types of taxes in Hong Kong
- Income taxes as applied to individuals
- Introducing RBA online Singapore tax calculator
I. Types of taxes in Hong Kong
Hong Kong offers one of the most tax-friendly systems globally, benefiting both businesses and individuals, with only three direct taxes imposed. Additionally, a range of generous allowances and deductions is available, enabling taxpayers to effectively minimize their taxable amounts. The three direct taxes include:
- Salaries Tax
- Property Tax
- Profits Tax
It’s important to note that corporate profits tax and salaries tax account for most of the taxes paid. Apart from direct taxes, there are additional types of taxes you should be familiar with, such as:
- Stamp Duty Tax
- Betting Duty Tax
- Royalty Tax
- Hotel Accommodation Tax
- Customs and excise duty Tax
Further, here are the taxes which Hong Kong does not impose:
- No sales tax or value-added tax (VAT);
- No withholding tax on dividends and interest;
- No capital gains tax;
- No tax on dividends; and,
- No estate tax.
II. Income taxes as applied to individuals
All individuals receiving income from or connected to Hong Kong through employment, office, or pension are liable to pay salaries tax at the following progressive rates:
| Net Chargeable Income | Tax rate |
| First 50,000 HKD | 2% |
| 50,001 – 100,000 HKD | 6% |
| 100,001 – 150,000 HKD | 10% |
| 150,001 – 200,000 HKD | 14% |
| Above 200,000 HKD | 17% |
| Tax rate on capital gains | 0% |
| Tax rate on income earned overseas | 0% |
| Tax rate on dividends from a Hong Kong company | 0% |
The information provided in the table originates from GovHK
Tax payable is calculated using a progressive rate applied to the “net chargeable income” or a standard rate on the “net income” (before allowances deduction), based on whichever amount is lower. Additionally, there is a tax reduction, subject to a maximum limit, to further decrease the tax liability.
Net Chargeable Income is calculated by subtracting deductions and allowances from the total income.
Net Income is calculated by subtracting deductions from the total income.
Whereas total income (chargeable income) includes:
- Salaries, wages, and director’s fees
- Commissions, bonuses, leave pay, end-of-contract gratuities, and payments in lieu of notice accrued on or after 1 April 2012
- Allowances, perquisites, and fringe benefits
- Tips from any person
- Salaries tax paid by your employer
- Value of a place of residence
- Stock awards and share options
- Back pay, gratuities, deferred pay, and pay in arrears
- Termination payments and retirement benefits
- Pensions
Allowable allowances include:
| Basic allowance | HKD 132,000 |
| Married person’s allowance | HKD 264,000 |
| Child allowance (For each of the 1st to 9th child) | HKD 130,000 |
| For each child born during the year, the child allowance will be increased by | HKD 120,000 |
| Dependent brother or sister allowance (for each dependent) | HKD 37,500 |
| Dependent parent and dependent grandparent allowance (for each dependent) | |
| – Parent/grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme | HKD 50,000 |
| – Parent/grandparent between the ages of 55 to 60 | HKD 25,000 |
| Additional dependent and dependent grandparent allowance | |
| – Parent/grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme | HKD 50,000 |
| – Parent/grandparent between the ages of 55 and 60 | HKD 25,000 |
| Single parent allowance | HKD 132,000 |
| Disabled dependent allowance (for each dependent) | HKD 75,000 |
| Personal disability allowance | HKD 75,000 |
The information provided in the table originates from GovHK
Allowable deductions include:
| Expenses of self-education | HKD 100,000 |
| Elderly residential care expense | HKD 100,000 |
| Home loan interest | HKD 100,000 |
| Mandatory contribution to recognized retirement schemes | HKD 18,000 |
| Approved charitable donations (income – allowable expenses – depreciation allowance) x percentage | 35% |
| Qualifying premiums paid under Voluntary Health Insurance Scheme (VHIS) policy (for each insured person) | HKD 8,000 |
| Qualifying annuity premiums and tax-deductible MPF voluntary contributions | HKD 60,000 |
| Domestic rent deduction* | HKD 100,000 |
The information provided in the table originates from GovHK
III. Looking for Assistance with Your Hong Kong Tax Calculations?
We hope that this guide streamlines the Hong Kong tax system and assists in understanding potential tax obligations in the region. For an estimation of your Hong Kong taxes and a comparison with taxes in your home country, utilize the RBA online Hong Kong Tax Calculator.
If you require additional tax assistance or information for your Hong Kong company, please do not hesitate to contact us. Startups have to manage numerous company accounts and tax filings over the years, and our professionals are highly skilled in taxation and auditing. Reach out to RBA today for expert support!
