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Like a few countries in Asia, Hong Kong does not have a capital gains tax per se. instead, there is another system in place that is still deemed rather effective.
What Is a Capital Gains Tax?
A capital gains tax is a tax that is made on profits that are realised from the sale of an asset. This asset should be a non-inventory asset. Some examples of where this type of tax system may be applicable include real estate, property, bonds, stocks, and precious metals.
These taxes are payable on any assets or items that are sold for a profit. The payable tax amount would differ depending on the profit and the country in question. Since Hong Kong’s tax for this category is 0%, the system does not apply here.
Not every country practices the capital gains tax system, and Hong Kong happens to be one of those countries that do not.
How the Tax System Works Instead
Instead of a capital gains tax, net gains on the transactions that are deemed speculative are the ones that may be eligible for tax. They are deemed taxable as part of the taxpayer’s trading income.
While the tax rate remains 0%, there is an exception. Any employee in the country that receives shares or options will be taxed at the normal income tax rate that applies. This is applicable if the shares or options are deemed part of your remuneration package.
Another thing to keep in mind about Hong Kong is that it does not have a lot of double tax agreements in place. This means that you are likely to be taxed double if you do have assets or generate an income outside the country.