Hong Kong hasno sales tax, no capital gains tax (interest and dividends are not taxable), no VAT and no estate duties. Aside from Salaries Tax, however, there are other taxes which could influence your life.


Property Tax

Property tax is charged on any land or buildings in Hong Kong at the rate of 15% on the annual rent receivable, less a 20% deduction for repairs and outgoings.

More information about completing a tax return for the rental of your property can be found at http://www.gov.hk/en/residents/taxes/property/propertycompute.htm


Profits Tax

A Hong Kong resident company is one whose management and control is based within in Hong Kong. A non-resident company is one whose overall management of daily business operations and execution of board decisions are carried out from outside Hong Kong. The basis for corporate taxes is the same in the case of resident and non-resident companies.

However the difference arises in qualification of taxable income. As Hong Kong follows a territorial system of taxation wherein tax is levied only on profits derived from business, trade or profession that is carried out in Hong Kong. Profits tax is not applicable to those profits which accrue overseas but are remitted to Hong Kong. Corporate tax is levied at a flat rate of 16.5% for incorporated and 15% for unicorporated businesses.

Profits tax is applicable to profits that are made through the sale of a property as a profit making enterprise.

More information on profits tax can be found at the following website: http://www.ird.gov.hk/eng/tax/bus_pft.htm#10


Stamp Duty

Stamp duty is payable on the lease, sale, or transfer of immovable property and on the transfer of shares. Stamp duty on the sale of immovable property varies with the amount or value of the consideration.

Amount or value of the consideration

Rate

Exceeds

Does not exceed

$2,000,000

1.5%

$2,000,000

$2,176,470

$30,000 + 20% of excess over $2,000,000

$2,176,470

$3,000,000

3%

$3,000,000

$3,290,330

$90,000 + 20% of excess over $3,000,000

$3,290,330

$4,000,000

4.5%

$4,000,000

$4,428,580

$180,000 + 20% of excess over $4,000,000

$4,428,580

$6,000,000

6%

$6,000,000

$6,720,000

$360,000 + 20% of excess over $6,000,000

$6,720,000

$20,000,000

7.5%
$20,000,000 $21,739,130 $1,500,000 + 20% of excess over $20,000,000
$21,739,130 8.5%

The maximum stamp duty payable is 3.75% of the value of property transferred. Stamp duty on the lease of property varies with the term of the lease and stamp duty liable for the purchase or sale of Hong Kong stock is 0.1% of the consideration or the Net Asset Value, whichever is higher. For share transfers, which are gifts, the stamp duty is HKD 5 +0.2% of the value of stock of stock. Details of stamp duty in Hong Kong can be found by following the link: http://www.gov.hk/en/residents/taxes/stamp/stamp_duty_rates.htm.


Double Taxation Treaties

Expats should always check the tax requirements with their home countries as, while they may not be liable for tax in HK, they may find that they need to pay it elsewhere.These double taxation agreements are of three types:

1. Comprehensive agreements that provide relief from double tax to all types of income.
2. Agreements that cover airline and shipping income.
3. Double Taxation agreements that cover airline income only.
4. Double taxation that cover only shipping income.

As of the 22nd June 2014, the Hong Kong government has comprehensive double tax agreements in place with the following countries:

  • Austria
  • Belgium
  • Brunei
  • Canada
  • Czech
  • France
  • Guernsey
  • Hungary
  • Indonesia
  • Ireland
  • Italy
  • Japan
  • Jersey
  • Kuwait
  • Liechtenstein
  • Luxembourg
  • Mainland of China
  • Malaysia
  • Malta
  • Mexico
  • The Netherlands
  • New Zealand
  • Portugal
  • Qatar
  • Spain
  • Switzerland
  • Thailand
  • United Kingdom
  • Vietnam

Details of these treaties can be found at http://www.ird.gov.hk/eng/tax/dta_inc.htm along with other treaties for shipping and airline income.


The Mandatory Provident Fund Contribution

The HKSAR Government has introduced a Mandatory Provident Fund (MPF). All employees are required to contribute a percentage of their salary to MPF. This will be invested and repaid to expatriates plus/minus losses on leaving Hong Kong permanently. Expatriate workers who are currently contributing to an ‘authorized’ overseas retirement scheme may be exempted from contributing to MPF.

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