Hong Kong: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Taxation in Hong Kong is based on a territorial source principle; the residence status of an individual does not affect his tax liability. The crux of the matter is whether the income of the taxpayer was derived from sources in Hong Kong or not. Only income that is sourced in Hong Kong is subject to tax.
Year of assessment is 01 April until 31 March of the following year.
INCOME TAX
Consequently, an individual residing in Hong Kong is not subject to any form of tax (i.e. salary, profit, and property tax) if his income is derived abroad. Foreign remittances to Hong Kong therefore are not subject to tax. Rental income is subject to Hong Kong Tax if the property is located in Hong Kong.
Profits Tax
Profits are taxed if they arise in or are derived from Hong Kong as a result of a trade, profession or business. The tax rate is 16.5% (previously 17.5%) for corporations and 15% (previously 16%) for other businesses.
Salaries Tax
Individuals earning income from employment are liable to pay salaries tax. The rate of tax after deductions and allowances is applied on a graduated scale, but the total salaries tax charged will not exceed 15% of a person's total assessable income after deductions.
Property Tax
Income derived from renting out property is subject to property tax. Property tax is charged at a standard rate of 15% (previously 16%) of the property’s net assessable value. The net assessable value (NAV) is the assessable value (after deduction of rates paid by the owner, if applicable, and irrecoverable rent), and then less an allowance of 20% of that assessable value for repairs and outgoings, regardless of whether or not repairs and outgoings were actually incurred.
| Gross Rent | |
| Less: | Irrecoverable Rent |
| Less: | Rates Paid By Owners |
| = | Assessable Value |
| Less: | Statutory Allowance for Repairs and Outgoings (20% of Assessable Value) |
| = | Net Assessable Value |
Property tax is levied on the owner of the property. The owner is obliged to keep sufficient records of rent received, such as lease agreements and duplicates of rent receipts, receipts for rates, correspondence relating to modification of lease terms and recovery of rents in arrears etc, for at least 7 years.
CAPITAL GAINS
No capital gains tax exists in Hong Kong.
Hong Kong - more data and information
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