| Net Taxable Income $ |
Tax Rate % |
| On the First 40,000 |
2% |
| On the Next 40,000 |
7% |
| On the Next 40,000 |
12% |
| Remainder |
17% |
| Year of Assessment | % of Tax Reduction | Maximum Per Case ($) |
Applicable Tax Types |
| 2009-10/ 2010-11 |
75% |
6000 |
salaries tax and tax under personal assessment |
| 2011-12 |
75% |
12000 |
salaries tax, profits tax and tax under personal assessment |
| 2012-13/ 2013-14 |
75% |
10000 |
salaries tax, profits tax and tax under personal assessment |
| 2014/15 |
75% |
20000 |
salaries tax, profits tax and tax under personal assessment |
| 2015-16 |
75% |
20000 |
salaries tax, profits tax and tax under personal assessment |
Legislative amendments are required for implementing the tax measures as proposed by the Financial Secretary in the 2016-17 Budget.
| Year of Assessment |
Tax Rate % |
| 2009-10 |
15% |
Lowest Individual Tax Rate is 2% and Highest Rate is 17%
| Net Taxable Income $ |
Tax Rate % |
| On the First 40,000 |
2% |
| On the Next 40,000 |
7% |
| On the Next 40,000 |
12% |
| Remainder |
17% |
Note - The maximum tax is subject to the 15% standard rate for income without personal deductions and credits.
Hong Kong corporate tax rate for 2014 is 16.5%. Unincorporated businesses pay a lower corporate tax rate of 15%.
There is no capital gain tax for both companies and individuals.
Dividend income and interest income derived from deposits are
tax exempt too.
In Hong Kong tax is deducted at source from the following
payments to non residents:
Dividend- 0%.
Interest- 0%.
Royalties- 4.5% payments to individuals. 4.95% payments to
companies.
Branch remittance to head office- 0%.
The contributions by the employer and the employee to
provident funds are subject to to ceiling defined by law.
Employer: 5% of the gross salary.
Employee: 5% of the gross salary.
The above mentioned rates relate to monthly salary of HKD 7,100
or more.
Self employed pay 5% social security too.
Hong Kong Business Deductions
Losses are carried forward indefinitely. There is no carry back
of losses.
Depreciation is deducted according to the type of the fixed
asset.
The depreciation rate for industrial buildings is 20%,
4% for commercial buildings and 60% for plant and
machinery.
There is no company consolidation for tax purpose.
Thin capitalization rules are not in effect in Hong Kong.
Bad debts are tax deductible.
For Hong Kong residents there is a basic deduction of HKD 120,000 per year.
The sum is increased for people aged 60 or more with additional deduction for other dependent family members and disabled people. Home loan interest of the main residence is tax deductible for 10 years, up to a limit of HKD 100,000 per year.
35% of donations are deductible, subject to a ceiling.
Payments to mandatory retirement and provident funds of up to HKD 17,500 per year are tax deductible.
Self education expenses up to HKD 80,000 per year are deductible.
The tax year in Hong Kong ends on December 31st. Advance payments of tax are made on the following basis.
An individual whose only income is from a salary is not obligated to file an annual tax return. His employer deducts tax from the employee and transfers the payment immediately to the tax authorities on a monthly basis.
A Self-Employed Individual is obliged to pay 100% of the tax forecast for a year, or an amount that is the equivalent of 98% of the tax paid in the previous year, whichever is the lower, The pre-payment is made in two installments. 40% of the total is paid by June 20th and the remaining 60% is paid on November 30. The date for filing an annual return for an individual is July 31.
Fines are imposed for arrears in filing an annual return at the rate of 120% - 240% of the tax, depending on the length of time that the return is in arrears.
A limited company is obligated to submit Financial Statements
within 30 days of the date of approval of the Statements.
Up until the date of approval of the Statements, the Company is
obligated to pay the amount of tax due for the previous year as
well as 40% of the advance on account of the tax forecast for
the current year.
A company is resident if incorporated in Hong Kong or has its actual management in Hong Kong.
The Hong Kong income tax is imposed on a territorial basis. Hong Kong companies and individuals pay income tax only on HK source income. Income derived outside of Hong Kong is tax exempt.
Individuals pay salary income tax when the employment services are rendered in Hong Kong.