Low, Simple and Competitive Tax System

Businesses and individuals in Hong Kong enjoy one of the most tax-friendly systems in the world.

Hong Kong's tax system is known for its simplicity, transparency, and competitiveness. With only three direct taxes imposed, the city offers a range of generous allowances and deductions that can significantly reduce your taxable amount.

There are only three types of taxes in Hong Kong:

1. Income Tax or Salaries Tax

  • Hong Kong has a simple and straightforward income tax system
  • Salaries tax is levied on net chargeable income (i.e. one’s assessable income, minus personal deductions and allowances) at a progressive rate of 2–17 percent, or at a flat rate of 15 percent, depending on which calculation produces the lower tax liability
  • Taxpayers in Hong Kong only need to file an annual income tax return, known as the "Tax Return - Individuals", to report their total income and pay the required taxes

2. Profits Tax

  • Corporations are subject to a two-tiered profits tax rate in Hong Kong:
    • 8.25 percent on the first HK$2 million of profits
    • 16.5 percent on profits above HK$2 million
  • Unincorporated businesses (partnerships and sole proprietorships) enjoy a corresponding two-tiered rate of 7.5 percent and 15 percent
  • Super-deductions of up to 300 percent are available for R&D costs
  • “Patent Box” Regime offers eligible IP income can be chargeable to profits tax at a concessionary tax rate of 5 percent

3. Property Tax

  • Property owners in Hong Kong are subject to a 15 percent property tax on the assessed rental value of their properties
  • Property tax is levied on both residential and commercial properties, including rental income from properties
  • There is no separate real estate tax or tax on property sales in Hong Kong. The property tax serves as the primary tax on real estate transactions and ownership

Tax Advantages

There are several types of tax that Hong Kong does not impose, including:

  • No sales tax or VAT
  • No withholding tax on dividends and interest
  • No capital gains tax or tax on capital gains
  • No tax on dividends
  • No estate tax

This means that in Hong Kong, both long-term capital gains and short-term capital gains are exempt from taxation. Investors and individuals can enjoy their investment returns without the burden of capital gains taxes.

This makes Hong Kong a tax haven with some of the lowest taxes in the world. Businesses and individuals can enjoy significant tax incentives.

Free Trade Port

Another key benefit of setting up a business in Hong Kong is its free trade policy. The city's free port status and streamlined customs procedures make it easier for companies to operate and engage in international trade.

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