What Is the Tax System Like for Expats in Hong Kong? A Comprehensive Guide
Hong Kong is known as one of the most expat-friendly cities globally, not only for its vibrant culture and business opportunities but also for its simple and favorable tax system. If you’re considering relocating to Hong Kong or are already living here as an expat, understanding the local tax landscape is crucial to managing your finances effectively. This guide offers an up-to-date, detailed overview of the Hong Kong tax system specifically tailored for expatriates.
Overview of Hong Kong’s Tax System
Hong Kong operates on a territorial basis for taxation, meaning only income derived from or earned in Hong Kong is subject to tax. This makes it an attractive destination for expats, especially those with international income streams.
Key features:
No Capital Gains Tax
No VAT or GST
No Tax on Dividends
No Estate or Inheritance Tax
For a comprehensive government overview, you can visit the Hong Kong Inland Revenue Department (IRD).
Types of Taxes Relevant to Expats
1. Salaries Tax
If you work and earn income in Hong Kong, you will be subject to Salaries Tax. This tax is only charged on income arising in or derived from Hong Kong.
Tax Year: April 1 to March 31
Tax Rates: Progressive rates from 2% to 17% (on net chargeable income after allowances) or a standard rate of 15% on your net income—whichever results in a lower tax bill.
Allowances: Personal allowances are available, including basic allowance, married person allowance, dependent allowances, and more.
More detailed info is available here: Salaries Tax Guide (IRD).
2. Property Tax
If you own rental property in Hong Kong, you will need to pay Property Tax on rental income. The tax rate is a flat 15% on the net assessable value of the property after allowable deductions.
Learn more: Property Tax (IRD).
3. Profits Tax
This applies to income from a trade, profession, or business carried out in Hong Kong. As an expat, if you run your own business here or are self-employed, Profits Tax is relevant.
Tax Rates: 8.25% for the first HK$2 million of profits and 16.5% thereafter (for corporations).
Details here: Profits Tax (IRD).
Double Taxation Agreements (DTAs)
Hong Kong has signed Double Taxation Agreements with numerous countries, which help prevent you from being taxed twice on the same income in your home country and in Hong Kong. This is crucial for expats with global income.
Check the full list and details of Hong Kong’s DTAs here: Double Taxation Relief.
How to File Taxes as an Expat
When and How to File?
Tax assessments are usually issued in May each year. You can file your tax return electronically via the IRD eTAX Service, or submit paper forms by the specified deadlines.
Documents Needed
Employment contract
Salary slips and payment records
Rental agreements (if applicable)
Details of any other Hong Kong-sourced income
It’s advisable to keep thorough records to support any claims for deductions or allowances.
How Do You File Taxes?
The tax year in Hong Kong runs from April 1 to March 31. Here’s how the filing process works:
Tax Return Issued: The IRD typically issues individual tax return forms in early May.
Filing Deadline:
Without tax representative: usually 1 month after issue
With tax rep/e-filing: extended deadline (up to August)
Assessment Notice: The IRD sends a notice of assessment showing how much tax you owe.
Payment: You’ll usually be required to pay in two installments:
First Instalment: January (around 75% of total)
Second Instalment: April (remaining 25%)
Tax Residency: What Expats Should Know
In Hong Kong, tax residency is determined by the source of income, not the duration of stay. However, if you stay or work in Hong Kong for more than 60 days in a tax year, you generally become liable for Salaries Tax on your Hong Kong income.
For more on tax residency rules: Tax Residency Guidelines.
Common Tax Deductions and Allowances for Expats
Basic Allowance: HK$132,000 (2023/24 tax year)
Dependent Allowances: For spouse, children, dependent parents/grandparents
Mandatory Provident Fund (MPF) Contributions: Contributions to MPF are deductible up to a ceiling. Learn more about MPF.
Tips for Expats to Optimize Tax
Plan your tax residency carefully: Avoid more than 60 days of presence if you want to minimize Hong Kong tax liability.
Utilize Double Taxation Agreements: Claim relief if your home country taxes the same income.
Consider professional tax advice: Firms like PwC Hong Kong or KPMG Hong Kong offer expat tax services.
File returns on time: Avoid penalties by staying up to date with deadlines.
How to Pay Tax in Hong Kong: A Step-by-Step Guide for Expats
Paying your taxes in Hong Kong is simple and can be done in several convenient ways:
1. Online via eTAX
Log in to eTAX
Go to "Payments"
Enter your Shroff Account Number (found on your demand note)
Select your payment method (PPS, FPS, e-Cheque, etc.)
Confirm and submit
2. Payment by Phone (PPS)
Register your bill: Call 18011 (English) or 18013 (Cantonese)
Pay your bill: Call 18031 (English) or 18033 (Cantonese)
Enter Merchant Code "10" and your bill number
3. Internet Banking
Log in to your bank’s online banking system
Choose “Bill Payment” > “Inland Revenue Department”
Enter your Shroff Account Number and amount
Confirm and pay
4. Faster Payment System (FPS)
Scan the FPS QR code on your tax bill using your bank’s app or e-wallet (AlipayHK, WeChat Pay)
Enter amount and confirm
5. ATM Payments
Available via HSBC, Hang Seng Bank, and other JETCO network ATMs
Choose “Bill Payment” > “Inland Revenue Department”
Input your Shroff Account Number
6. In-Person at Post Offices and Convenience Stores
Post Offices: Pay by cash, cheque, or EPS (up to HK$120,000)
7-Eleven, Circle K, VanGO: Pay in cash (up to HK$5,000 per transaction) with your payment voucher
7. Payment by Post
Send a crossed cheque (in HKD, drawn from a HK bank) with your payment voucher to:
Inland Revenue Department
P.O. Box 28282
Gloucester Road Post Office
Hong Kong
8. From Overseas
Use Hong Kong internet banking or send a cheque by post as above
Note: Late payments incur a 5% surcharge, and an additional 10% if unpaid for six months.
More information on payment methods: IRD Payment Options
Conclusion
Hong Kong’s simple and favorable tax system remains one of its greatest draws for expats. Its territorial tax regime, relatively low tax rates, and absence of capital gains or inheritance tax create a welcoming environment for foreign professionals and their families. By understanding the key aspects of the tax system and leveraging available allowances and international agreements, expats can ensure compliance while optimizing their tax obligations.
For further reading, visit the Hong Kong Inland Revenue Department.
