Hong Kong Taxes

1. Corporate Tax

• Profit Tax Rate:
  • 8.25% on the first HKD 2 million of assessable profits.
  • 16.5% on assessable profits above HKD 2 million.
• Territorial Tax System:
  • Only income derived from Hong Kong is subject to taxation.
  • Foreign-sourced income is not taxed, unless caught under the Foreign-Sourced Income Exemption (FSIE) regime.
• Exemptions:
  • Dividends received by a Hong Kong company are generally not taxable.
  • No withholding tax on dividends or interest payments.
• Foreign-Sourced Income Exemption (FSIE) Regime:
  • As of 2023, offshore passive income (dividends, interest, intellectual property income, and disposal gains) is taxable unless certain substance requirements are met.

2. Individual Income Tax (Salaries Tax)

• Progressive tax rates:
  • 2% on the first HKD 50,000
  • 6% on the next HKD 50,000
  • 10% on the next HKD 50,000
  • 14% on the next HKD 50,000
  • 17% on the remaining amount
  • Standard Rate: 15% on net income after allowable deductions and tax allowances.
• Only Hong Kong-Sourced Income Taxed:
  • Income earned outside Hong Kong is not taxable.

3. Withholding Tax

• Dividends and Interest: No withholding tax.
• Royalties:
  • 2.475% – 4.95% for non-resident entities, depending on the circumstances.

4. Capital Gains Tax

• No Capital Gains Tax on the sale of shares, property, or other assets.

5. Property Taxes

• Property Tax Rate:
  • 15% on net assessable value (rental income minus allowable deductions).
• Stamp Duty:
  • Stock Transfers: 0.26% (0.13% on both buyer and seller).
• Real Estate Transactions:
  • Up to 15% for residential property (varies based on buyer type).
  • Buyer’s Stamp Duty (BSD): 15% for non-resident buyers.
  • Special Stamp Duty (SSD): Up to 20% if property sold within 36 months.

6. Goods and Services Tax (GST) / Value Added Tax (VAT)

• Hong Kong does not impose GST or VAT.

7. Foreign Tax Relief and Double Taxation Agreements (DTAs)

• Hong Kong has over 40 DTAs to prevent double taxation.
• Tax credits may be available for foreign taxes paid.