If you will consider moving a business to Hong-Kong, you have to do research and check its tax regime. What are the incentives that would attract foreign investment? Are there any tax treaties in place? What is the rate for corporate tax? With this guide, we'll help you understand Hong-kong taxation better.

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info@hkcompanyregistration.com
Guide to
Taxation in
Hong Kong

2. Hong Kong is a gateway to world’s second
largest economy of China, with the added
advantages of having an English-speaking
population, and operating under the
English common law. Moreover, the city is
an important part of country’s ambitious
Belt and Road Initiative, and is poised to
benefit from the ongoing development of
the Guangdong-Hong Kong-Macao Bay
Area. It is a Special Administrative Region
following China’s One Country, Two
Systems policy, which means that Hong
Kong follows a free trade policy, enjoying:
To top it all, companies in Hong Kong benefit
from one of the most tax-friendly jurisdictions
in the world, which according to the World
Bank’s Doing Business 2019 Report, is also the
world’s lowest tax region.
free movement of goods, information and
capital
a free port status, meaning no tariff on
general imports and easy customs
procedures
sovereign (independent from China)
participation in international forums
no foreign ownership restrictions
no estate tax
no capital gains tax (note if real estate
dealings are part of a profit-making
business activity, the IRD may regard it as
a business, and impose profits tax on such
activities)
no withholding tax
no taxes on dividends
no excise duty/tariffs on general imports
no foreign exchange controls
no Goods and Services Tax (GST), no Value
Added Tax (VAT), no sales tax
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+852 2780 0607Guide to Taxation in Hong Kong
Hong Kong imposes:
Salient points about
Taxation in Hong
Kong
1. Not much taxation in
Hong Kong

3. In Hong Kong, the territorial principle of
taxation if followed, with no distinction
between residents and non-residents.
Firstly, this means that companies,
partnerships, or sole proprietorships, are
charged tax on all profits, except that arising
from any business activities carried outside of
Hong Kong, even if those profits are remitted
to Hong Kong.
Secondly, do note that a non-resident (in
terms of taxation) may have to pay taxes if the
concerned business activities are performed
within the territorial boundaries of Hong
Kong.
2. Territorial Principle of
Taxation
In Hong Kong, a year of assessment for
taxation purposes runs from April 1, to March
31, of the following year. And the Inland
Revenue Department (IRD) of the
Government of the Hong Kong Special
Administrative Region is the city’s tax
regulator.
3. Year of assessment in
Hong Kong
For continuing businesses – the corporate
tax returns are issued on the first working day
of April every year.
For newly incorporated companies – they
receive their first corporate tax return some 18
months after the date of company
incorporation, or commencement of
business.
It is important to note here the date of
submission for tax returns is always specified
on the tax returns sent to each company,
which is normally within a time period of one
month from the date of issue.
But not every company is sent tax returns
forms by the IRD, as it may feel that some
companies may not have had assessable
profits to be taxed. However, if a company
receives the tax returns forms, it must file
those in time, even if there had been no
profits in the year of assessment.
4. Filing of profits tax
(corporate tax) returns in
Hong Kong
Hong Kong has entered into 41
Comprehensive Double Taxation Agreements
(DTAs) with a number of jurisdictions, which
are also referred to as tax treaties. These
treaties help companies incorporated in Hong
Kong avoid double taxation caused by
overlapping tax jurisdictions.
5. Tax treaties to avoid
double taxation in Hong
Kong
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4. Moreover, entities and non-resident persons,
must file the following forms to report their
profits tax liability:
The above must be filed along with the
supplementary forms (BIRS1 to BIRS10)
introduced this year. These have been
introduced by the IRD to collect information
on preferential tax regimes and tax incentives.
Form BIR51 – for companies
Form BIR52 – for persons other than
companies
Form BIR54 – for non-resident persons
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+852 2780 0607Guide to Taxation in Hong Kong
Types of Taxes in
Hong Kong
n Hong Kong, corporate tax is known as
profits tax, which is now two-tiered.
In March 2018, the Hong Kong Government
enacted the Inland Revenue (Amendment)
(No. 3) Ordinance 2018, which introduced
two-tiered profits tax rates for companies and
unincorporated businesses in Hong Kong.
Among other things, it lowered the tax rate for
the first $2 million of assessable profits for
companies with effect from 2018/19.
As the profits tax rates stand now:
1. Profits tax
For companies – 8.25% for the first HK$2
million of profits of companies; above this,
profits are taxed at 16.5%.
For unincorporated business
(partnerships and sole proprietorships)
– 7.5% for the first HK$2 million of profits;
and 15% above this.
In Hong Kong, only three types of direct taxes
are imposed on companies and individuals,
which are detailed below:

5. In Hong Kong, tax on individual net chargeable income is known as salaries tax, which is
progressive in nature – starting at 2% and ending at 17%, or at a standard rate of 15%; whichever
is lower.
IRD sends Form BIR60 to individuals (normally on first working day of May each year), which
must be filed in time even if there’s no income to report. This must be filed along with the three
supplementary forms (BIRSP1 to BIRSP3) introduced this year. Do note that spouses can file joint
tax returns in Hong Kong, but all the forms must be signed by both in such cases.
2. Salaries tax
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NET CHARGEABLE
INCOME ($)
STANDARD
RATE (%)
RATE (%) TAX ($)
On the First
On the Next
On the Next
On the Next
Remainder
50,000
50,000
100,000
50,000
150,000
50,000
200,000
2%
6%
10%
14%
17%
1,000
3,000
4,000
5,000
9,000
7,000
16,000
15

6. While the property tax rate is similar to standard salaries tax i.e. 15%, the forms to filled and
submitted vary. (sent by the IRD normally on the first working day of April each year).
3. Property tax
Form BIR57: this form is to filled by property owners (including corporation and body of
persons) who jointly own or co-own a property
Form BIR58: this form is to filled by property owners (including corporation and body of
persons) where there is no co- or joint ownership.
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+852 2780 0607
info@hkcompanyregistration.com
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The information contained herein is intended for
general information purposes only and shall not be
regarded as professional advice. Readers are therefore
advised that before acting on any matter arising from
these notes, they should discuss their particular
situation with the Firm. No liability can be accepted
for any action taken as result of reading the notes
without prior consultation with regard to all relevant
factors.
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