Key Takeaways
- Hong Kong taxes follow the territorial principle, only income sourced in Hong Kong is taxable.
- Salaries tax is charged at progressive rates or a flat 15% on income up to HK$5 million.
- Offshore companies pay 0% corporate tax.
- Employees of offshore companies may be exempt from salaries tax if they don’t work in Hong Kong.
- Foreigners staying in Hong Kong fewer than 60 days in a tax year can often enjoy 0% salaries tax.
How to Navigate HK Personal Taxes as a Foreigner
Hong Kong is known as a tax haven, primarily due to its lenient tax policies on foreign owned companies. However, foreign company owners shall still understand rules in Hong Kong, to avoid incurring unnecessary taxes to the HK government. Below, we will walk you through Hong Kong’s policies on personal Salary Taxes in Hong Kong, and the benefits it can potentially offer to entrepreneurs working outside of Hong Kong.
Hong Kong Salary Taxes: The Underlying Principle
Hong Kong’s taxation policies are governed by the territorial source principle, which states that only income arising in, or derived from Hong Kong, is taxable in Hong Kong.
The deciding factor of whether a taxpayer’s income is taxable is where their employment is carried out. Therefore, employees employed by foreign companies, who carry out their work inside Hong Kong, can be subject to HK salaries tax. Conversely, income earned while working entirely outside Hong Kong may be exempt from taxation, even if the employing company is based in Hong Kong.
Hong Kong Tax Rate for Salaries
In Hong Kong, the salaries tax rate for individuals is either calculated at progressive rates on net chargeable income, or at a standard rate of 15% on net income up to HK$5 million, whichever is lower. The year of assessment always runs from 1 April to 31 March of the following year.
- Net Chargeable Income = Total Income – Deductions – Allowances
- Net Income = Total Income – Deductions
Every HK resident has a basic allowance of HK$132,000. In other words, you do not have to pay salaries tax if your total salary falls below HK$132,000. For employees who choose to be charged on net chargeable income, the tax rates are as follows, as of 2024-2025:
| Net chargeable Income | Income Rate | Tax |
|---|---|---|
| First HK$50,000 | 2% | HK$1,000 |
| Next HK$50,000 | 6% | HK$3,000 |
| HK$100,000 | HK$4,000 | |
| Next HK$50,000 | 10% | HK$5,000 |
| HK$150,000 | HK$9,000 | |
| Next HK$50,000 | 14% | HK$7,000 |
| HK$200,000 | HK$16,000 | |
| Remainder | 17% |
What are the Chargeable Incomes for Salary Tax?
You are required to report the following income in your salaries tax assessment, and you can exclude severance payments, long Service Payments and jury fees. Below is a list of chargeable incomes for your reference.
| Salary, wages or director’s fees |
| Commissions, bonuses, leave pay, end of contract gratuities and payments in lieu of notice |
| Allowances, perquisites and fringe benefits |
| Holiday journey benefits |
| Tips from any person |
| Salaries tax paid by your employer |
| Value of a place of residence provided by your employer |
| Stock awards and share options |
| Back pay, gratuities, deferred pay and pay in arrears |
| Termination payments and retirement benefits |
| Pensions |
Hong Kong Salaries Tax Calculator
The Hong Kong government’s website provides taxpayers with a tool to calculate their salaries tax. You may click on this link to access the HK Salaries Tax Calculator. By filling in the information and clicking on “compute” at the bottom of the page, another page will appear, showing your estimated tax liability.
Tax in Hong Kong for foreigners: 2 Possibilities for exemption
1. Your employment is rendered outside of Hong Kong
Hong Kong’s tax department uses the 60 days rule to determine if a taxpayer’s service is performed within Hong Kong. Even if you’re employed by a HK company, as long as you reside in Hong Kong for under 60 days within the year of assessment, your service will be seen as having been performed outside of Hong Kong. As a result, the income you’ve earned from performing that service will not be taxable in HK.
However, note that 60-day rule exemption does not apply to directors, because directorship is regarded as an “office”, as opposed to ordinary employment. The salary of directors of onshore companies will be deemed to have been sourced from HK regardless of the days they spend inside Hong Kong.
2. Offshore Status
The profits of offshore companies are not taxable in Hong Kong. To qualify as an offshore company, the HK entity must have no customers, suppliers, employees, and operations in HK. As long as your company has secured offshore status, and you don’t work physically in Hong Kong, you’re also eligible to apply for personal tax exemption.
At the end of the day, Hong Kong is a jurisdiction that is committed to encouraging international business, without burdening foreign company owners and their employees with costly tax filings. This commitment remains clear in its policies on both corporate and personal income tax, which is why Hong Kong will remain one of the strongest tax haven countries in the world.
Frequently Asked Questions
1. When do you pay tax in Hong Kong?
Typically, the IRD sends out the BIR60 Individual Tax Return Form on the first working day of May each year, which covers the tax year ending on March 31. The Inland Revenue Department will calculate the amount of tax payable and you should settle the bill on time. Once you receive your Individuals Tax Return form BIR60, the tax payer should complete and file it before the due date.If you do not receive your tax form in a particular year, the taxpayer must notify the Inland Revenue Department proactively.
2. How much tax do you pay on $10,000?
As in 2026, every individual has an allowance of HK$132,000, meaning that if the individual’s annual income falls below that number, they do not have to pay salaries taxes to the HK government, As the total salary of a taxpayer who makes $10,000 per month is under HK$132,000, their income should not be subject to salaries tax.
3. What are allowable deductions?
The following are some examples of allowing deductions for salaries taxes
- Expenses of Self-education
- Elderly Residential Care Expenses
- Interest Payments to Produce Rental Income from Properties
- Contributions to a Mandatory Provident Fund Scheme or Recognized Occupational Retirement Scheme
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