VAT and Sales Tax in Hong Kong

Does Hong Kong have VAT or a sales tax?

No. Hong Kong imposes no Value Added Tax (VAT), no Goods and Services Tax (GST), and no general sales tax of any kind. This is a deliberate policy feature of the territory's tax system. The Inland Revenue Department (IRD) confirms that Hong Kong's revenue framework relies on direct taxes -- profits tax, salaries tax, and property tax -- rather than a consumption levy on goods and services.[1] The Financial Services and the Treasury Bureau (FSTB) describes the system as built on principles of simplicity, low rates, and a narrow base, with no turnover tax in any form.[2]

A government proposal to introduce a 5% GST was launched for public consultation on 19 July 2006. After nine months of hearings, Financial Secretary Henry Tang announced withdrawal of the proposal on 5 December 2006. Of 2,200 written submissions received, 65 percent opposed the measure. Opposition came from all major political parties in the Legislative Council and from business associations concerned about Hong Kong's competitive position as a low-tax centre. The proposal has not been revived since.[3] PwC's current Hong Kong SAR tax summary confirms the position remains unchanged: "Hong Kong SAR does not have a VAT, goods and services tax, or sales tax."[4]

For businesses, this means no VAT registration obligation, no periodic VAT returns, no input-credit mechanism, no reverse-charge requirement, and no e-invoicing mandate for domestic transactions. This represents a material compliance advantage over peer jurisdictions such as Singapore (GST 9%), mainland China (VAT 13%), and Japan (consumption tax 10%).

If you have questions about how the absence of VAT interacts with your cross-border or domestic obligations, consult a qualified tax professional.

What indirect and transaction taxes does Hong Kong impose?

Although there is no general consumption tax, Hong Kong does collect revenue through several specific transaction levies and duties. The table below summarises the main ones as of June 2026.

What excise duties apply to goods?

Hong Kong levies excise duties on only four categories of dutiable commodities, administered by the Hong Kong Customs and Excise Department under the Dutiable Commodities Ordinance (Cap 109).[5] All other imported goods enter Hong Kong duty-free -- a foundational feature of the territory's free-port status.

The four dutiable categories are: (1) liquor with alcoholic strength exceeding 30% by volume, taxed ad valorem (100% on the first HKD 200 of value per litre, 10% on the remainder); wine and liquor at or below 30% abv carry zero duty, and wine duties were abolished in February 2008; (2) tobacco, with cigarettes taxed at HKD 3,306 per 1,000 cigarettes; cigars at HKD 4,258 per kilogram; other manufactured tobacco at HKD 4,005 per kilogram; (3) hydrocarbon oil, including unleaded motor spirit at HKD 6.06 per litre, aircraft spirit at HKD 6.51 per litre, and light diesel oil at HKD 2.89 per litre; and (4) methyl alcohol at HKD 840 per hectolitre measured at 20 degrees Celsius.

For businesses importing alcohol, tobacco, or fuel, these duties apply regardless of whether a general VAT exists. No input-credit mechanism offsets them.

What is the hotel accommodation tax?

The Hotel Accommodation Tax (HAT) was reinstated at 3% with effect from 1 January 2025, following a resolution passed by the Legislative Council on 23 October 2024 and gazetted on 25 October 2024.[6] The tax had been waived at 0% since 1 July 2008, when it was suspended during the global financial crisis to support the tourism industry.

HAT applies to the accommodation charge paid by or on behalf of hotel and guesthouse guests. Hotels must file quarterly returns and pay HAT to the IRD within 14 days of each quarter end (31 March, 30 June, 30 September, 31 December). The standard 10% service charge is excluded from the taxable base. Properties with fewer than 10 rooms or charging less than HKD 15 per night are exempt.

The HAT is not a VAT -- it does not carry an input-credit mechanism and applies only to the accommodation sector.

Why does Hong Kong maintain a narrow tax base?

Hong Kong's tax policy philosophy, as stated by the FSTB, rests on four explicit principles: simplicity, low rates, the territorial principle (only Hong Kong-sourced income is taxed), and neutrality.[2] The schedular system taxes only three income streams -- profits, salaries, and property rental income. Income, capital gains, dividends, and interest outside those schedules go untaxed entirely.

Fiscal revenue that would ordinarily flow from a VAT or GST is replaced largely by land-related revenue: land premiums from government land sales, stamp duties on property transactions, and government rates on property occupation (5% of rateable value, assessed quarterly by the Rating and Valuation Department). This model depends on a sustained property market and a high savings rate that suppresses pressure for a consumption-tax base.

For businesses operating in Hong Kong, the practical effect is significant: no VAT registration obligation, no quarterly returns to file, no input-credit mechanism, and no reverse-charge obligation on cross-border services. The Hong Kong country overview covers broader aspects of operating in the territory.

For questions about how this framework applies to your specific business or filing position, consult a qualified tax professional.