Tax system in Hong Kong

Tools:

Hong Kong has one of the most favourable tax systems in the world.

There are several reasons for that and one of them is that the maximum individual income tax rate is quite low.

For income tax or Net Chargeable Income, i.e. assessable income after deductions and allowances, it is charged at progressive rates. See below for a typical list of the rates from the 2007/2008 tax year. The amount of Hong Kong tax charged, however will not exceed the amount charged by applying the standard rate to the net total income. If you can negotiate in your contract, your apartment rent can be used to offset some of your salaries tax, providing the lease is in your name.

Here is a list of the progressive rates for the 2007/2008 tax year:

Net chargeable income (HK$) Rate Taxe (HK$)
For the first 35000 2% 700
For tde next 35000 7% 2450
Total 1 70000 3150
On tde next 35000 12% 4200
Total 2 105000 7350
Remainder 17%

Individuals income earned in Hong Kong via employment or from services rendered for visits longer than 60 days for a given tax year is subject to salaries tax. This applies for non-resident in Hong Kong as well. There might be an exemption if the employee (not including a director) renders all services outside Hong Kong or if the visits to Hong Kong do not exceed 60 days in a given year.

When coming to Hong Kong to work, you must also consider the Hong Kong tax rules of the country the expatriate comes from. Indeed, you may see if the expatriate is still considered a tax resident of the home country but is the expatriate still required to file tax returns on worldwide income? You may also consider if the social security contributions cease in the home country or is there a voluntary contribution you can do to keep it running. If you rent your property back in your home country, are you going to pay taxes for that too or is there some kind of exemption?

All to say that you must consider carefully what you are doing for the taxes in order to pay the right amount and more to the point in order to avoid double-taxation for the same thing.

By OCDE standards, Hong Kong has extremely low tax rates and there are several usual taxes that are completely non-existent in Hong Kong like capital gains taxes, withholding taxes, sales taxes, VAT or annual net worth taxes. This is why it was and still is a paradise in terms of taxes.

Update 8/04/2010


Tools:

Facebook Twitter LinkedIn Pinterest WhatsApp Addthis

Recommended Partners

Keep more of your money when transferring funds overseas!

Fexco_logo

If you want to move money abroad, from Hong Kong or to Hong Kong for example, Fexco provides efficient and secure global bank to bank transfers and bespoke payment solutions for both business and personal clients.

Why Fexco

Fexco provides a secure international money transfer service online or by telephone with bank beating fx rates and low fees. Specialises in high-value transfers.

Faster, cheaper, safer International money transfers.
Dedicated fx dealer who will oversee your transfer from start to finish
Make payments from anywhere with our secure online platform, PayDirect.
If you prefer the personal touch, then our payments team can be contacted by phone.

Main characteristics

Fexco will help you to keep your overseas money transfer costs to a minimum.

Margin 0.6%
Regulator FCA
Fee £10 < £5K or Free > £5k
Mini £1K
Ccy All (130 currencies, incl ‘exotics’)
Services Repatriation of funds, Property, Regular payments, High Value payments, spot, online, telephone.

Get an online quote today

When you are ready to make your transfer, John and his team will be available to help you with better rates and an unrivalled service to make sure your funds are delivered securely and speedily.



Do you have comments or personal information to communicate about this article? Add your comment.


Find more definitions and general answers on expatriation issues in the Expat FAQ (Frequently Asked Questions).

Go to the Forum to talk more about tax system in Hong Kong, at work.

Download the full digital PDF expat guide in Hong Kong

Download the guide: Hong Kong, Hong Kong
  • See in one single booklet all the articles for a city guide for expatriates.
  • Enjoy full colour photos to illustrate each section.
  • Additionnal maps: Region, City view, Neighborhood, Street view.

  • - My Life Abroad -
    A selection of expat stories

    "A fun compulsive read!"
    J. Matcham, Amazon

    "I strongly advise people ready to live abroad to read this book!"
    Patrice, Amazon