Hong Kong’s economy is highly dependent on international trade and finance. The value of services and goods trade is 4 times the GDP.
If you live in Hong Kong or are considering the move, then you might wonder about Hong Kong Taxes. Read on to explore this guide on understanding these taxes today.
Current Tax Rates for Businesses
For companies, the taxes will be different than personal taxes. It’s important to hire a specialist for your income tax returns.
For incorporated businesses, the tax rate can range from 8.25%-16.5%. Whereas for unincorporated businesses, it can range from 7.5%-15%. There are no tax rates for foreign-sourced income, capital gains, and shareholder dividends.
Current Tax Rates for Individuals
For individuals performing the Hong Kong tax filing, if you make about 1-50,000 HKD then your tax rate is about 2%. The more that’s chargeable income that you make, the higher your tax rate is.
If you have over 200,000 HKD then your tax rate is about 17%. The good news is that there are no local income taxes in Hong Kong.
Employment Income
You’re considered non-Hong Kong employment if you meet certain conditions. First, your remuneration is paid outside of Hong Kong SAR.
Next, you’re a resident outside of Hong Kong SAR. Your contract of employment is entered and negotiated outside of Hong Kong SAR. If you don’t meet any of the conditions above, you’re likely to be considered as Hong Kong employment.
No account will be taken of services in Hong Kong SAR during visits that don’t exceed 60 days. If you fall under Hong Kong employment, your employment income isn’t taxable if the employment services for a year are outside of Hong Kong SAR.
Territorial Basis
Your citizenship or residence doesn’t determine liability to the Hong Kong salary tax. The term Resident is defined under the comprehensive double tax agreements.
Whether you’re a resident or not, you’re subject to Hong Kong salaries tax on employment income. This also includes the Hong Kong pension and Hong Kong SAR.
A History of Hong Kong Taxes
In the past, the Hong Kong tax rate was actually known as a tax-free port. Due to being tax-free, people around the world would do business here.
After the Second World War, a temporary taxation system was put into place. After this, there was an income tax that was capped at 10%. It copied what Britain had for its colonies around the world.
How Hong Kong Taxes Compare
When comparing Hong Kong to around the world, Hong Kong is one of the most business-friendly countries. Singapore is a competitor for a great place to do business.
Better Understanding Hong Kong Taxes
After exploring this guide, you should have a better understanding of Hong Kong taxes. If you have questions or concerns, make sure to reach out to a tax professional for Hong Kong taxes.
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