Personal taxation in Hong Kong
The taxation of individuals in Hong Kong is calculated for the income they produce while working in the city. A foreign resident in Hong Kong is not liable for the salaries tax if he or she spends less than 60 days in a tax year in Hong Kong. However, the taxation principles are fully applicable for regular Hong Kong residents.
Tax rates for individuals in Hong Kong
The types of taxes that exist for individuals in Hong Kong are the following:
- the salaries tax: on income from employment or pension;
- profits tax: on income derived from a trade or profession;
- the property tax: on income derived from land and buildings located in Hong Kong.
The tax rates for individuals in Hong Kong (residents and non-residents) are calculated based on an income bracket:
- up to 40,000 HKD: 2%;
- between 40,001 and 80,000 HKD: 7%;
- between 80,001 and 120,000: 12%;
- between 120,01 and over: 17%
An individual is defined as a Hong Kong resident for the purpose of taxation if the employer/provider of income is a company in Hong Kong
. This is a territorial taxation and the residence status of the employee is generally not considered in respect to his/her liability to the salaries tax.
Our Hong Kong company formation experts can help you determine how the rules apply according to the employer’s location and how the tax liability is calculated for director’s fees and pensions.
Personal assessment in Hong Kong
Married couples in Hong Kong can opt for joint or separate assessment. A tax year is calculated between April 1 of each ear and March 31 of the following year. Individuals must fill in and submit the tax return forms issued by the Inland Revenue Department.
The failure to submit the required forms in due time of to comply with the taxation principles results in penalties for individuals which can result in additional taxes.
To eliminate the negative effects of overlapping taxes for foreign employees in the city, Hong Kong has signed more than 30 double tax agreements
Our company registration agents in Hong Kong
can give you even more details about taxation and corporate taxes in Hong Kong
. You can contact us for further information.