Hong Kong Taxation Service
Hotline: 86-755-82143348, Email:anitayao@citilinkia.com
Hong Kong taxes are among the lowest in the world, and our tax regime is simple and predictable. Hong Kong's simple and low tax system is a great attraction to foreign investors. This low fiscal burden for all, domestic or international players, corporates and individuals alike makes Hong Kong attractive.
In fact low tax is the most cited reason for regional offices to set up in Hong Kong! This tax regime makes Hong Kong one of the lowest tax environments among developed economies.Hong Kong operates a territorial basis of taxation under which taxes are only imposed on profits or income with a Hong Kong source. Foreign-sourced income is not taxable even if remitted to Hong Kong.
Taxation
The Profits tax rate is the same for foreign and local companies - a low 16.5 percent. The actual tax bill is often even less after various deductions and depreciation allowances.There is no capital gains tax in Hong Kong, withholding tax on dividends and interest or collection of social security benefits. The salaries tax rate is at a maximum rate of 15 percent, imposed only on all salary income of individuals derived in or from Hong Kong. The salaries tax is demanded on a yearly basis and can be paid in two installments, usually between December and March.
The property tax applies to owners of land or buildings situated in Hong Kong. It is low by international standards: 16 percent (for 2004-5) of the rental income from the land or buildings and an allowance of 20 percent is permitted for repairs and maintenance. There is no sales tax or VAT in Hong Kong. The limited tax base, combined with exceptionally low tax rates, makes Hong Kong's tax incidence much lower than in virtually all other developed economies.
Profits Tax
Profits tax is charged only on net profits arising in or deriving from Hong Kong, from a trade, profession or business carried on in Hong Kong. Incorporated and unincorporated businesses are taxed at different rates - incorporated businesses at 16.5% and unincorporated at 15%. Profits tax is paid initially on the basis of profits made in the year preceding the year of assessment and is subsequently adjusted according to profits actually made in the assessment year. The fiscal year in Hong Kong runs from 1 April to 31 March.
Salaries Tax
Salaries tax is charged on emoluments arising in or derived from Hong Kong. The basis of assessment and method of payment (including provisional payments) are similar to the system for profits tax. Taxpayers receive their salary gross ie the tax is not deducted. Salaries tax is demanded on a yearly basis, and is normally paid in two instalments between December and March. Employees must remember to save their tax in preparation for this bill! Foreign nationals who spend less than 60 days in Hong Kong in any year of assessment are exempt from salaries tax. Employers will register new employees with the authorities so that the tax authorities should automatically be notified when a new tax subject is around.
Salaries Tax Computation
The Department has developed a simple Salaries Tax Computation Program to help you calculate your own Salaries Tax liability. All you have to do is to select the assessment year, marital status, input your income and the number of your dependants and then press the "Compute" button at the bottom of the input page. Another page will appear which shows you your exact Salaries Tax liability. Salaries tax is calculated in two ways and the taxpayer pays the lesser amount. The two methods are:
Tax calculated at a stepped rate on the net income figure ie after tax allowances. The stepped rates are: 2% on the first HK$40,000; 7% on the next HK$40,000; 12% on the next HK$40,000 and the balance at 17%. Tax calculated at the standard rate (15%) applied to the gross income figure. Only around 40% of the workforce has to pay salaries tax
Double Taxation
Hong Kong's tax basis is territorial, therefore income derived by a resident from places outside Hong Kong will generally not face double taxation in Hong Kong. Many countries which tax their residents on a world-wide basis also provide their residents who operate businesses in Hong Kong with unilateral tax relief for Hong Kong tax paid on income derived from Hong Kong. Hong Kong also allows a deduction for foreign tax paid on turnover basis in respect of an income which is also subject to tax in Hong Kong. Businesses operating in Hong Kong therefore do not generally have problems with double taxation of income.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to anitayao@citilinkia.com