Tax in Hong Kong

Who is the tax authority?

The Inland Revenue Department (IRD) administers Hong Kong tax under the Inland Revenue Ordinance (Cap. 112). The IRD operates as a department of the Hong Kong SAR Government under the Financial Secretary.

The IRD covers Salaries Tax, Profits Tax, Property Tax, Personal Assessment, Stamp Duty, and Business Registration. Estate duty was abolished for deaths on or after 11 February 2006 under the Estate Duty Ordinance (Cap. 111). The Customs and Excise Department handles narrow excise duties on alcohol, tobacco, hydrocarbon oil, and methyl alcohol — there is no general tariff or VAT.

The Hong Kong Institute of Certified Public Accountants (HKICPA) regulates the principal credentialed accounting profession. The Taxation Institute of Hong Kong runs the Certified Tax-Adviser designation for tax specialists.

What is the tax year and when are returns due?

Hong Kong's Year of Assessment (YA) runs from 1 April to 31 March. The 2025/26 YA covers 1 April 2025 to 31 March 2026.

The IRD typically issues individual Salaries Tax returns (BIR60) in May or June. Filers have one month from the issue date unless extension is granted via the Block Extension Scheme operated by registered tax representatives.

Companies file Profits Tax returns (BIR51 for corporations, BIR54 for partnerships) within one month of issue. Extended deadlines apply under the Block Extension Scheme based on accounting-year-end date.

How does Hong Kong determine source and residency?

Hong Kong applies a territorial basis of taxation — the key question is the source of income, not the residence of the person. Salaries Tax applies to employment income sourced in Hong Kong, with source determined under DIPN 10 (considering contract negotiation, employer residence, payment location, and duties location).

Profits Tax applies to profits arising in or derived from Hong Kong. Property Tax applies to rental income from real estate located in Hong Kong. No worldwide-income basis applies to individuals or companies.

The 60-day rule under section 8(1A)(c) of the Inland Revenue Ordinance (IRO) exempts short-term business visitors from Salaries Tax where they are present in Hong Kong for no more than 60 days in the Year of Assessment. For treaty-access purposes under Comprehensive Avoidance of Double Taxation Agreements (CDTAs), an individual is treated as a Hong Kong resident where they ordinarily reside in Hong Kong, or are present for more than 180 days in a YA, or more than 300 days across two consecutive YAs.

How does Salaries Tax work?

Salaries Tax for individuals is computed on the lower of two methods. The progressive method applies rates of 2%, 6%, 10%, 14%, and 17% to net chargeable income (after deductions and allowances). The standard-rate method caps the total Salaries Tax at 15% of net total income before personal allowances (or 16% on net total income above HKD 5 million under the two-tiered standard rate introduced from YA 2024/25).

Personal allowances reduce the progressive base significantly. The Basic Allowance is HKD 132,000; the Married Person's Allowance is HKD 264,000; Child Allowance is HKD 130,000 per child. Dependent Parent or Grandparent Allowance ranges from HKD 50,000 to HKD 100,000 per dependant based on age.

Allowable outgoings include Mandatory Provident Fund contributions up to HKD 18,000 per year, qualifying Voluntary Health Insurance Scheme premiums, and home-loan interest up to HKD 100,000 per year on an owner-occupied principal residence (subject to a 20-year cumulative cap). Personal Assessment is an elective regime that combines Salaries Tax, Profits Tax on sole-proprietorship share, and Property Tax onto a single progressive base for certain taxpayers.

Property Tax applies at 15% on the net assessable value (NAV) of rental income from Hong Kong real estate. Owner-occupied properties are excluded from Property Tax.

How does Profits Tax work?

Hong Kong uses a two-tiered Profits Tax regime in force since Year of Assessment 2018/19. The regime applies to profits arising in or derived from Hong Kong — offshore profits remain outside the Profits Tax base under the territorial principle.

The Foreign-Source Income Exemption (FSIE) regime under Schedule 3 of the IRO was refined from 1 January 2023 (and further updated in 2024). Specified offshore passive income — interest, dividends, IP-derived income, and equity-disposal gains — received in Hong Kong by a resident entity is subject to Profits Tax unless economic-substance requirements and participation requirements are met.

Hong Kong enacted the OECD Pillar Two Global Anti-Base Erosion rules through the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill. The Income Inclusion Rule and Domestic Minimum Top-up Tax apply to MNE groups with consolidated revenue above EUR 750 million, for fiscal years beginning on or after 1 January 2025.

Is there VAT or indirect tax?

Hong Kong has no Value Added Tax, no Goods and Services Tax, and no general sales tax. This is one of the most distinctive features of the Hong Kong fiscal structure among major financial centres globally.

How are cryptoassets taxed?

The IRD applies the territorial framework to cryptoassets under Departmental Interpretation and Practice Note No. 39 (DIPN 39). A badges-of-trade analysis determines whether disposal gains are of a capital or trading nature.

For individuals, cryptoasset disposal gains are taxable as Profits Tax where the activity amounts to carrying on a trade in Hong Kong with profits arising in Hong Kong. Long-term capital-investment holdings are not subject to Profits Tax — there is no capital gains tax in Hong Kong. The badges-of-trade analysis considers frequency of transactions, holding period, volume, financing method, and the nature of the activity.

Mining and staking activity carried on as a trade in Hong Kong falls within the Profits Tax base. Receipt of cryptoassets as employment income is subject to Salaries Tax at fair market value on the date of receipt, where the employment is Hong Kong-sourced. The Securities and Futures Commission (SFC) regulates Virtual Asset Service Providers under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).

What is the treaty network?

Hong Kong maintains approximately 50 Comprehensive Avoidance of Double Taxation Agreements (CDTAs) in force. The network is smaller than major sovereign-jurisdiction networks, reflecting Hong Kong's status as a Special Administrative Region rather than a sovereign state.

Most Hong Kong CDTAs follow the OECD Model Convention with Hong Kong-specific reservations on source-of-income provisions, reflecting the territorial taxation basis. Hong Kong is not a direct party to the OECD Multilateral Instrument (MLI) — the MLI is open only to OECD member states, and China (as the OECD-relevant party for SAR purposes) holds Hong Kong's position. Bilateral CDTA modifications proceed via individual protocol.

Hong Kong has no comprehensive income tax treaty with the United States. US persons working or investing in Hong Kong must rely on the US Foreign Tax Credit under the Internal Revenue Code rather than bilateral reduced withholding rates. Hong Kong signed the OECD Inclusive Framework on BEPS and implements the BEPS minimum standards through domestic legislation.

Where does Hong Kong sit in the Greater China financial hub cohort?

Hong Kong anchors the Greater China financial hub cohort alongside Singapore and Macau. The broader Asia-Pacific tax landscape splits into 5 distinct archetypes:

Common pitfalls and penalties

Foreigners and new arrivals in Hong Kong encounter a predictable set of traps:

When should you talk to a Hong Kong Tax-Adviser?

Some situations are straightforward enough to handle via the IRD's eTAX portal. Others benefit from professional input:

• Your employment involves cross-border work between Hong Kong and the Mainland (dual-employer or split-employment structures)
• Your company receives offshore passive income and needs FSIE economic-substance assessment
• You are part of an MNE group with consolidated revenue above EUR 750 million (Pillar Two implications from 2025)
• You hold cryptoassets and the trading vs capital character of your disposals is unclear
• You are a US person in Hong Kong and need to reconcile the absence of a bilateral treaty with your US filing obligations
• You received a Notice of Assessment, an additional assessment, or a field audit notification from the IRD
• You are moving to or from Hong Kong mid-year and need to determine your source-of-income position under DIPN 10

Find vetted Hong Kong tax practitioners through the directory below.

This page is general information, not personal guidance for your specific circumstances. Tax rules change. Always check current figures on the IRD website (ird.gov.hk) or with a licensed Hong Kong practitioner before filing.