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This article was kindly prepared by CXC Hong Kong Pty Ltd. We do not take any liability for the accuracy of material supplied by third parties. You can work out your approximate HK Income Tax liability from the Inland Revenue Hong Kong tax calculator 2010/11.
Hong Kong Tax
Hong Kong has one of the most favorable tax systems in the world. To start with, there are no corporation withholding taxes for monies remitted out of Hong Kong to non-residents. Furthermore, the maximum individual income tax rate is very low.
Hong Kong Income Tax
Net Chargeable Income, i.e. assessable income after deductions and allowances, is charged at progressive rates as tabulated below. The amount of Hong Kong tax charged, however, shall not exceed the amount charged by applying the standard rate to the net total income, i.e. assessable income after deductions but before allowances. If you can negotiate the appropriate provision in your contract, your apartment rent may be used to offset some of your salaries tax, providing the lease is in your name.
Year of Assessment 2009/10
| Net Chargeable Income (HK$) | Rate | Tax (HK$) | |
| On the first | 40,000 | 2% | 800 |
| On the next | 40,000 | 7% | 2,800 |
| Total (example 1) | 80,000 | 3,600 | |
| On the next | 40,000 | 12% | 4,800 |
| Total (example 2) | 120,000 | 8,400 | |
| Remainder | 17% | ||
| Stand Rate of Tax | 15% |
Income Tax Exposure
Individuals earning income that are derived in Hong Kong via employment or from services rendered in Hong Kong for visits longer than 60 days in any fiscal year is subject to salaries tax. This rule applies even if the individual is not ordinarily resident in Hong Kong. A specific statutory Hong Kong tax exemption applies 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 the year of assessment. Home Country Tax Considerations When coming to Hong Kong to work, it is important to take note of the Hong Kong tax rules of the country the expatriate comes from. Questions that one should ponder are:
- Is the expatriate still considered a tax resident of the home country (e.g.. Those coming in the UK will only be non-resident for tax purposes if they are out of the UK for a full tax year)?
- Is the expatriate still required to file tax returns on worldwide income?
- Must social security contributions cease in the home country or is there a voluntary contribution that can be made.
- Will rental income of the property in the home country that is rented out be subject to tax or is there an exemption that can be applied for?
Hence, it requires considerable tax planning that one has to undertake before setting sail. With careful planning, one can minimize tax paid or avoid double taxation.
Please email or call Clement Cheung (+852 34783938), or visit the CXC Hong Kong Pty Ltd website for more information on Hong Kong tax.
