Hong Kong has a reputation of tax-friendly for decades. As Hong Kong is a Free Trade Port. Tax is low, simple and competitive for tax residents in Hong Kong. If you are going to start a new career or business in Hong Kong, here’s a little tax guide for you.
Direct Tax
Hong Kong only imposes 3-type of direct taxes. That is, Profit Tax, Salaries Tax and Property Tax. In the past few years, Government offers generous allowance and deduction to lower your taxable amount.
2023/24: Hong Kong Tax Residents Salaries tax rate
Here are the salaries tax rates for the period from 1 April 2023 to 31 March 2024:
| Net Chargeable Income | Rate | |
| Taxable Income Band | $1-$50,000 | 2% |
| Taxable Income Band | $50,000-$100,000 | 6% |
| Taxable Income Band | $100,001-$150,000 | 10% |
| Taxable Income Band | $150,001-$200,000 | 14% |
| Taxable Income Band | $200,000+ | 17% |
Do you need to pay Salaries Tax?
Hong Kong observes a territorial basis of taxation; therefore, the concept of tax residents has no significance in determining tax liability, except in limited circumstances.
Your income will be chargeable as below:
- If your income is generated from Hong Kong, including arising in or derived from Hong Kong employment, office and pension.
- Your income from services rendered in Hong Kong during visits of more than 60 days in a tax year.
What kinds of income is taxable?
Employment income
An employee is subject to salaries tax if their employment income is sourced in Hong Kong. Even if you are not usually resident in the territory. Thus, cash emoluments including bonuses and gratuities are taxable income. However, benefits are non-taxable. Unless they are converted into cash. Or specifically relate to holiday travel or the education of a child. Moreover, the provision of accommodation by an employer creates a taxable benefit equal to an amount ranging from 4%-10% of the employee’s other taxable income, depending on the type of accommodation.
Self-employment and business income
Anyone carrying on a profession, trade or business in Hong Kong is subject
to profits tax on income arising in or derived from Hong Kong from that
profession, trade or business.
Directors’ fees
Directors fees derived from a company that has its central management and control in Hong Kong are subject to salaries tax in Hong Kong. Otherwise, directors’ fees are not taxable.
Employer-provided stock options
Employer-provided stock options are generally taxable at the time of exercise. However, for an individual who has non-Hong Kong employment and is taxed on a pro rata basis by reference to the number of days of his or her services in Hong Kong only. That is, part or all of the option gain may be excluded from taxable income. The amount excluded depends on various factors including whether the option is granted conditionally or unconditionally. And, if granted conditionally, the number of days on which the individual performed Hong Kong services during the vesting period.
Taxation of employment-related share awards
Employment-related share awards are generally considered to be perquisites from employment and taxed as part of the remuneration. In general, they become taxable when an employee is entitled to the full economic benefit of the shares awarded. If the employee has a non-Hong Kong employment, proration of the income by reference to the number of days of their services in Hong Kong that is similar to the proration applicable to stock option benefits may also be allowed.
For further information, please contact us.
You may want to read: What to do when I receive a Profit Tax Return?