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Hong Kong

Financial Year – 1 April – 31 March
Currency – Hong Kong dollar (HKD)

Corporate Tax Summary

Residence – In Hong Kong, the tax residency basis is not applicable. According to Double Tax Agreements/Arrangements (DTA), companies incorporated in Hong Kong, or companies incorporated outside Hong Kong but with their central management and control in Hong Kong, are regarded as resident in Hong Kong.

Basis of Taxation – Hong Kong profits tax is levied on a territory basis. Only income that arises in or is derived from Hong Kong (i.e. Hong Kong source) is subject to profits tax. Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong are subject to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business.

Reference
Corporate Income Tax Rate (%) Companies: 8.25% / 16.50%
Unincorporated Businesses: 7.50% / 15%
For Companies:
8.25% for the first HKD 2,000,000 of assessable profits and 16.5% on the remainder.

For Unincorporated Businesses:
7.5% for the first HKD 2,000,000 of assessable profits and 15% on the remainder.

Branch Tax Rate (%) Same as Corporate Income Tax Rate Same as Corporate Income Tax Rate
Withholding Tax Rate:
Dividends – Franked N/A N/A
Dividends – Unfranked N/A N/A
Dividends – Conduit Foreign Income N/A N/A
Interest N/A N/A
Royalties from Intellectual Property Same as Corporate Income Tax Rate Same as Corporate Income Tax Rate
Fund Payments from Managed Investment Trusts N/A N/A
Branch Remittance Tax N/A N/A
Net Operating Losses (Years)
Carry Back N/A
Carry Forward Tax losses may be carried forward and set off against the assessable income in subsequent years of assessment without any time limit.

Individual Tax Summary

Residence – In Hong Kong, the tax residency basis is not applicable. According to Double Tax Agreements/Arrangements (DTA), (i) any individual who ordinarily resides in Hong Kong, or (ii) any individual who stays in Hong Kong for more than 180 days during a year of assessment, or for more than 300 days in two consecutive years of assessment, one of which is the relevant year of assessment, are regarded as resident in Hong Kong.

Basis of Taxation – Income from employment, an office or a pension derived in Hong Kong is subject to salaries tax. A locally employed individual or foreigner who derives Hong Kong source employment income, is subject to salaries tax.

Filing Status – Tax returns are filed on an individual basis. Married couples may choose to file a joint or separate assessment. If an individual taxpayer has different types of taxable income in a year of assessment, he/she can choose to be assessed under personal assessment.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
First HKD 50,000 2%
Next HKD 50,000 6%
Next HKD 50,000 10%
Next HKD 50,000 14% 14%
On the remainder 17%

Goods and Services Tax (GST)

Rate N/A
Taxable Transactions N/A
Registration N/A
Filing and Payment N/A

Other Taxes Payable

Tax Reference
Payroll Tax N/A
Stamp Duty The Stamp Duty Ordinance (Cap. 117) imposes duty on certain types of documents, which are mainly as follows:
1. Conveyance on sale (i.e. assignment)
2. Agreement for the sale of immovable property
3. Lease of immovable property (i.e. tenancy agreement)
4. Transfer of Hong Kong stock.
The sale and conveyance of non-residential property is taxed on the value of the property transferred with maximum ad valorem stamp duty (AVD) of 8.5%. The AVD on residential property is a flat rate of 15%, except under certain circumstances.
The agreement for sale of residential property/non-residential property is subject to ad valorem stamp duty. The applicable ad valorem duty rates are the same as those for the conveyance on sale of immovable property as specified above. If the conveyance on sale of an immovable property is executed in conformity with a chargeable agreement for the sale of that property and the agreement for sale is duly stamped, the conveyance on sale is chargeable with stamp duty of HKD 100.30.
The rates of stamp duty on the lease of immovable property are:
1. 0.25% of the total rent payable for a lease with a one-year term (or less)
3. 0.5% of the annual or average annual rent for a lease with a term exceeding one year but not exceeding three years
3. 1% of the annual or average annual rent for a lease with a term exceeding three years
The rate of stamp duty on Hong Kong share transfer is 0.2% of the consideration per transaction.
Land Tax N/A

Last updated: 30.10.2020