Hong Kong’s tax system is known for its efficiency and simplicity, making it a top choice for businesses in the region. With low tax rates and a streamlined approach that eliminates many tax types, calculating tax liabilities is relatively easy. Hong Kong companies also enjoy various tax deductions and exemptions, especially for those conducting business overseas. Additionally, Hong Kong companies benefit from various tax deductions and exemptions, particularly those engaged in international business activities.
In this guide, we will simplify the complexities of Thailand’s personal tax framework by offering comprehensive overviews of:
- Types of taxes in Hong Kong
- Income taxes as applied to business entities
- Introducing RBA online Hong Kong tax calculator
Types of Taxes in Hong Kong
Hong Kong offers one of the most tax-friendly systems globally, benefiting both businesses and individuals, with only three direct taxes imposed. Additionally, a range of generous allowances and deductions is available, enabling taxpayers to effectively minimize their taxable amounts. The three direct taxes include:
- Salaries Tax
- Property Tax
- Profits Tax
It’s important to note that corporate profits tax and salaries tax account for most of the taxes paid. Apart from direct taxes, there are additional types of taxes you should be familiar with, such as:
- Stamp Duty Tax
- Betting Duty Tax
- Royalty Tax
- Hotel Accommodation Tax
- Customs and Excise Duty Tax
Further, here are the taxes which Hong Kong does not impose:
- No sales tax or value-added tax (VAT);
- No withholding tax on dividends and interest;
- No capital gains tax;
- No tax on dividends; and
- No estate tax.
Income Taxes as Applied to Business Entities
| Income | Tax Rate | |
| Corporations | First HKD 2 million | 8.25% |
| Over HKD 2 million | 16.50% | |
| Unincorporated businesses | First HKD 2 million | 7.50% |
| Over HKD 2 million | 15% | |
| Tax rate on capital gains | 0% | |
| Tax rate on shareholder dividends | 0% | |
| Tax rate on foreign-sourced income | 0% | |
The information provided in the table originates from GovHK
The Special Administrative Region (SAR) has implemented a two-tiered profits tax regime for companies. Under this system, the tax rate for the initial HKD 2 million (US$255,782) of assessable profits is reduced to 8.25 percent. Any profits exceeding this amount will continue to be taxed at the standard rate of 16.5 percent.
For example, if a corporation makes HKD 5 million during the year, the first HKD 2 million would be taxed at 8.25% (HKD 165,000 tax payable) and the remaining HKD 8 million would be taxed at 16.5% (HKD 495,000 tax payable), resulting in a total tax payable of HKD 660,000.
To avoid double benefits, enterprises that already enjoy preferential tax regimes, such as the corporate treasury center regime and aircraft leasing regime, will not be eligible for the two-tiered profits tax regime.
Further, Hong Kong offers a concessionary tax rate for specific types of income. This reduced rate applies to:
- Trading profits and interest income: Earned from qualifying debt instruments (QDIs) issued in Hong Kong.
- Offshore business: conducted by professional reinsurance companies.
Looking for Assistance with Your Hong Kong Tax Calculations?
We hope that this guide streamlines the Hong Kong tax system and assists in understanding potential tax obligations in the region. For an estimation of your Hong Kong taxes and a comparison with taxes in your home country, utilize the RBA online Hong Kong Tax Calculator.
If you require additional tax assistance or information for your Hong Kong company, please do not hesitate to contact us. Startups have to manage numerous company accounts and tax filings over the years, and our professionals are highly skilled in taxation and auditing. Reach out to RBA today for expert support!
