1. Basis of taxation
Income is taxed on territorial basis. Three kinds of income are taxed under the Hong Kong Inland Revenue Ordinance:-
- Profit arising in or derived from trade, profession or business carried out in Hong Kong (subject to Profits Tax).
- Income from any office or employment (subject to Salaries Tax).
- Rental income in respect of land and buildings (subject to Property Tax).
A tax year (“year of assessment”) starts from 1 April and ends on 31 March the following year. For profits tax purposes, a company computes assessable profit on the basis of the accounting year that ends in a year of assessment.
2. Corporate Tax
Corporation : 16.5%
Unincorporated business: 15%
3. Withholding tax rate
No true withholding tax in Hong Kong. Tax department can raise assessment on a non-resident, or in name of his Hong Kong agent, in respect of profit from business undertaken through the Hong Kong agent.
For following types of income, if chargeable to profits tax:-
- Payments for use in Hong Kong of any cinema or television films or sound recordings or advertising materials, royalties and payments for use of intellectual property in Hong Kong or for use outside Hong Kong if those payments are deductible for profits tax purposes;
- Payments in respect of appearances or performance in Hong Kong by entertainers or sportsmen.
Assessment is raised upon in Hong Kong who has paid or credited the sum to the non-resident. A payer in Hong Kong retains out of his payments sufficient amounts to pay the tax. The effective tax rate for type (1) incomes above is 16.5% (from 2008/09), if the non-resident is an associate of the Hong Kong resident, and 4.95% (from 2008/09) in other cases.
4. Residential individual tax rates
Salaries tax is calculated either (1) at flat rate of 15% (current standard rate from 2008/09) on net assessable income, or (2) at progressive rates on net chargeable income. The progressive rates are:
Marginal net chargeable income |
(HK$) |
Tax rate
(from 2008/09)
|
First |
40,000 |
2% |
Next |
40,000 |
7% |
Next |
40,000 |
12% |
Balance |
|
17% |
5. Non-residential individual tax rates
Salaries tax is chargeable on both residents and non-residents on the same basis in respect of their Hong Kong sourced employment income.
6. Goods and services tax
Hong Kong does not have any goods and services tax.
7. Estate duty
Abolished from 11 February 2006.
8. Stamp duty
(1) For purchases or sale of Hong Kong stock
0.2% on the consideration or the value of shares.
(2) For issue of bearer documents
3% of the value of the bearer instrument at the time of issue.
(3) For conveyances on sale, agreements for sale or transfers of immovable property
Amount or value of consideration |
Duty payable |
| (in HK$) |
(in HK$) |
$1 - $2,000,000 |
$100 |
$2,000,001 - $2,351,760 |
$100 + 10% of excess over $2,000,000 |
$2,351,761 - $3,000,000 |
1.5% x consideration |
$3,000,001 - $3,290,320 |
$45,000 + 10% of excess over $3,000,000 |
$3,290,321 - $4,000,000 |
2.25% x consideration |
$4,000,001 - $4,428,570 |
$90,000 + 10% of excess over $4,000,000 |
$4,428,571 - $6,000,000 |
3% x consideration |
$6,000,001 - $6,720,000 |
$180,000 + 10% of excess over $6,000,000 |
$6,720,001 and above |
3.75% x consideration |
9. Property tax
Tax at 15% charged on the net assessable value of land and buildings. Net assessable value represents money or money’s worth for the right to use land or buildings or land and buildings less certain deductions.
10. Tax return filing dead lines
Tax returns |
Tax/taxpayer concerned |
Bulk
issue date |
Filing
due date |
|
Profits tax return (BIR 51) |
Profits tax of corporation |
1 April |
30 April |
(1) |
Profits tax return (BIR 52) |
Profits tax of partnership |
1 April |
30 April |
(1) |
Tax return - Individuals (BIR 60) |
Profits tax of sole proprietorship, salaries tax and property tax of individual |
1 May |
31 May |
(2) |
Property tax return (BIR 57) |
Property tax |
1 April |
30 April |
|
(1) Taxpayers with tax representatives filing date extended to 15 August (Accounts year end between 1 Dec to 31 Dec) or 15 November (Accounts year end between 1 January to 31 March)
(2) Taxpayers with tax representatives filing date extended to 30 June (not involving sole proprietorship) and 30 September (involving sole proprietorship)
11. Double tax agreements
Hong Kong has entered into double tax agreements (“DTA”) with mainland China, Belgium, Thailand and Luxembourg, which in general have no effect on dividend, interest and royalty income of non-resident.
I. Dividend: DTA has no effect on dividend income of non-resident as dividend income is not subject to taxation in Hong Kong.
II. Interest: Provided that the interest income of non-resident is not derived from business carried out in Hong Kong, it is not subject to Hong Kong taxation.
III. Royalties: See Section 3 above.
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