In order to attract global investment and expat genius to Hong Kong. Hong Kong not only offers an attractive tax regime for corporation and entrepreneurs. Moreover, it also has a competitive low taxation scheme for personal income tax on Hong Kong Salary tax. Correspondingly, salaries Tax referred to Personal Income Tax as well.
Firstly, what is assessment year?
Hong Kong set a year of assessment runs from 1 April to 31 March of the following year. For example, 1 April 2020 to 31 March 2021
Secondly, what is Provisional Salaries Tax?
Provisional Salaries Tax for a year is usually based on the income less the allowances of the preceding year.
Thirdly, how to calculate your Salary Tax?
Personal Income can be assessed by Progressive Rate on your net chargeable income. Or at Standard Rate on your Net Income, whichever is lower.
Progressive Rate
Net Chargeable Income = Total Income – Deductions – Allowances
Standard Rate
Net Income = Total Income – Deductions
-
Allowances Table:
| Allowances |
2020/21 Onwards |
| Basic Allowance |
132,000 |
| Married Person’s Allowance |
264,000 |
| Child Allowance (Each) |
120,000 |
| Dependent Brother or Sister (Each) |
37,500 |
| Dependent Parent & Grandparent Allowance (Each) | |
| Ø Aged 60 or over |
50,000 |
| Ø Aged 55 and below 60 |
25,000 |
| Single Parent Allowance |
132,000 |
| Personal Disability Allowance |
75,000 |
| Disable Dependent Allowance (Each) |
75,000 |
-
Deductions Table:
| Deductions |
2020/21 Onwards |
| Expenses of Self-Education |
100,000 |
| Elderly Residential Care Expenses |
100,000 |
| Home Loan Interest |
100,000 |
| Mandatory Contributions to Recognized Retirement Schemes |
18,000 |
| Qualifying Premiums Paid under Voluntary Health Insurance Scheme (VHIS)
Policy (For each insured person) |
8,000 |
| Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions |
60,000 |
| Approved Charitable Donations |
35% |
-
Calculation of Tax Payable:
|
Net Chargeable |
Rate | |
| On the First |
$50,000 |
2% |
| On the Next |
$50,000 |
6% |
| On the Next |
$50,000 |
10% |
|
On the Next |
$50,000 |
14% |
| Remainder |
17% |
|
| Standard Rates of Tax |
15% |
For further information, please contact us.
You may want to read: HONG KONG PERSONAL TAX ALLOWANCE FOR 2020/2021