Hong Kong tax has no passport test. Tax follows the source of the income, not nationality, visa type or where you are paid. There is no separate expatriate tax: foreigners are taxed under the same Salaries Tax, Profits Tax and Property Tax rules as everyone else.
Employers generally do not withhold tax from monthly salary, so individuals are responsible for filing and paying their own tax. The areas that most often cause trouble are the 60-day rule, provisional tax, filing without a return, and departure clearance.
At a glance
- Test
- Source of income, not nationality
- Expatriate tax?
- No separate regime
- 60 days or less?
- Not automatically exempt; never covers director's fees
- Withholding
- Generally none, except on departure
- No return received?
- You may still need to notify the IRD
The core principle: source, not nationality
A foreigner is not taxed in Hong Kong merely because they hold a foreign passport, work on an employment visa, are a non-permanent resident, are paid offshore, or live outside Hong Kong for part of the year. Equally, salary paid into an overseas account or by an overseas group company is not automatically non-taxable. The question in every case is whether the income arises in or is derived from Hong Kong.
| Tax | Applies broadly to |
|---|---|
| Salaries Tax | Employment and office income, including directorships |
| Profits Tax | Trade, profession or business income, including sole proprietors and partners |
| Property Tax | Rental income from Hong Kong property |
Salaries Tax: what counts
Taxable income can include salary, bonuses, commissions, housing and relocation allowances, leave pay, gratuities, director's fees, share awards (subject to timing rules) and certain benefits in kind.
How much tax you will pay
Salaries Tax is calculated two ways and you pay the lower: progressive rates on net chargeable income (after allowances), or the standard rate on net income (before allowances). The IRD makes the comparison for you.
| Net chargeable income (HK$) | Progressive rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder | 17% |
| Net income (HK$) | Standard rate |
|---|---|
| Up to 5,000,000 | 15% |
| Above 5,000,000 | 16% |
The 60-day rule
Where a person's presence in Hong Kong in a year of assessment (1 April to 31 March) amounts to visits totalling 60 days or less, employment income for services rendered during those visits may be excluded, subject to the statutory conditions. It is intended for genuine short-term visitors, does not apply automatically, and does not apply to director's fees. Keep clear travel records; this is a fact-specific area that needs a case-by-case review.
Provisional tax: the instalment trap
From the second year, a demand note often combines final tax for the year just ended with provisional tax for the year ahead, usually about 75% in January and 25% in April. Many newcomers expect to pay one year's tax and are caught short. Where income falls materially, you may apply to reduce provisional tax within the deadline. Budget for it from the outset.
Filing obligations
- The Individual Tax Return (BIR60) is generally issued in May or early June and is due within one month of issue, unless extended.
- If you are chargeable to tax and receive no return, you may still need to notify the IRD; failure can lead to penalties.
- This matters most for new arrivals, directors receiving fees, people with mixed Hong Kong and offshore duties, freelancers and departing employees.
Leaving Hong Kong
When an employee is leaving Hong Kong for more than a month, the employer must file Form IR56G at least one month before the expected departure, withhold all payments due from the date of filing, and release them on the earlier of one month passing or receipt of a Letter of Release. In practice most employers wait for the letter. The employee should settle outstanding tax so the letter can be issued.
Freelancers, rental income and allowances
- A foreign freelancer carrying on business in Hong Kong is generally subject to Profits Tax and must obtain Business Registration within one month of starting.
- Rental income from Hong Kong property may be subject to Property Tax; personal assessment may help in some cases, depending on the facts.
- Foreigners are entitled to the same allowances and deductions as local taxpayers, including MPF mandatory contributions (capped), approved donations, home loan interest, self-education expenses and qualifying annuity and voluntary MPF contributions.
- Treaty relief from double taxation may be available, depending on residence, the nature and source of income, days of presence and the treaty wording.
Common misunderstandings
| What people assume | The actual position |
|---|---|
| "I am not a Hong Kong resident, so I do not pay Hong Kong tax." | Tax follows the source of the income, not residence alone. |
| "My salary is paid overseas, so it is not taxable." | Where payment is made does not by itself decide taxability. |
| "Under 60 days means automatically exempt." | The rule is limited, fact-specific and excludes director's fees. |
| "My employer handles my tax." | Employees generally file and pay their own Salaries Tax. |
| "No return means no obligation." | You may still need to notify the IRD. |
- Assessing an individual's or new hire's likely Hong Kong tax position before arrival.
- Preparing and filing Individual Tax Returns (BIR60) and Profits Tax Returns.
- Calculating provisional tax and applying for reductions where appropriate.
- Employer-side IR56 reporting, including IR56G and departure clearance.
- Cross-border and treaty questions, with MAP Asia Pacific where a broader review is needed.
In summary
- Hong Kong taxes the source of income, not your passport.
- Watch the 60-day rule, provisional tax, filing duties and departure clearance.
- Seek advice early where duties are cross-border, benefits are complex or treaty relief may apply.
Official references
- Inland Revenue Ordinance (Cap. 112)
- Inland Revenue Department: Salaries Tax rates, allowances and departure procedures, www.ird.gov.hk
- Mandatory Provident Fund Schemes Authority, www.mpfa.org.hk