Taxation of Hong Kong residents
The taxation of individuals in Hong Kong is based on the salaries tax along with two other types of taxes for individuals owning property or earning profits in Hong Kong. An individual is considered a taxpayer in Hong Kong if he or she earns some type of income in the city regardless of the effective residence place of that individual.
Tax compliance for individuals in Hong Kong
Taxation in Hong Kong
is based on the profits earned in the city. This means that the Hong Kong salaries tax
is charged on an individual’s income derived from work performed effectively in Hong Kong. Individuals who work for branches in Hong Kong
may have to determine the amount of income that is derived from that Hong Kong employment location.
Foreign employees who spend less than 60 days in Hong Kong in one fiscal year are not liable for salaries tax. This exemption is only available for employees and does not apply for director’s fees. The personal income tax in Hong Kong is progressive, with rates starting at 2% and reaching as much as 17% with a cap at the standard rate of 15%.
Additional information about taxation for individuals in Hong Kong
Other taxes on individuals in Hong Kong
are the property tax and the profits tax. Property owners in Hong Kong
are subject to a 15% standard rate for the rental income. The employee’s contribution to social security is 5%, deducted by the employer followed by an additional 5%. This percentage applies for monthly incomes of 7,100 HDK or more. Self-employed individuals in Hong Kong also have to pay 5% of their income on a monthly or annual basis.
The tax year in Hong Kong begins on April 1 and ends on March 31 the next year. Failure to comply with the filing requirements from the Inland Revenue Department results in penalties.
If you own a company in Hong Kong
and want to hire employees you can contact our lawyers in Hong Kong
for reference to the employment law.