Individual Personal Income Tax Services in Hong Kong

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Individual Personal Income Tax Services in Hong Kong – Our Tax Experts Are Ready to Help You

Individual Personal Income Tax Services in Hong Kong – Hong Kong is no doubt an investment hotspot for global investors to start businesses. Many international companies have set up their regional office or Asia Pacific headquarters in Hong Kong, thus attracting many top-level executives and business leaders to work in the country. Though Hong Kong does not impose income tax on individual total income, there are three main types of income that will be taxed under specific heads of taxation – salaries tax, profits tax, and property tax. Please note that income from employment, office, or pension is taxed under the salaries tax. 3E Accounting provides a slew of individual personal income tax services in Hong Kong:

Basic personal tax compliance
Corporate statutory compliance
Hong Kong taxation and tax planning

Our tax experts are ready to provide advice to individuals employed in Hong Kong so that they know what taxes they are required to pay and what types of deductions they are eligible for.

Territorial Basis of Taxation in Hong Kong

Hong Kong adopts a territorial basis of taxation. Unlike the residence-based system, only income generated or sourced inside Hong Kong will be taxed. In other words, all individuals, whether a resident or non-resident of Hong Kong, are subject to Hong Kong salaries tax on the following incomes:

Hong Kong-sourced employment income,
Income from an office held in Hong Kong, and
Income from a Hong Kong pension.

Employment Income

An individual has Hong Kong-sourced employment income if his or her employment

is a Hong Kong employment, or
is a non-Hong Kong employment but the employment services are rendered by the person in Hong Kong.

The Hong Kong Inland Revenue Department (HKIRD) accepts that an employment is a non-Hong Kong employment if the said employment has ALL of the following three conditions:

The employment contract was negotiated and is enforceable outside Hong Kong.
The employer is a non-Hong Kong resident.
The employer’s income is paid outside of Hong Kong.

Income From an Office

Under this category, the source of income from an office (for example the directors’ fees) is determined by the company’s location – where the company paying the fees is centrally managed and controlled.

Pensions

In general, pensions are subject to Hong Kong salaries tax if the funds out of which the payment are made:

are managed and controlled in Hong Kong, and
the pensions (other than a government pension) are related to services rendered in Hong Kong.

Personal Income Tax (Salaries Tax) Rates

In Hong Kong, a person’s income from employment (less allowable deductions and personal allowances) is chargeable to Hong Kong salaries tax at progressive rates from 2% to 17%.

Tax Returns and Compliance

In Hong Kong, every taxpayer has to notify the Commissioner of Inland Revenue that he or she is chargeable to tax within four months after the end of the year of assessment (in which he or she is chargeable).

The Inland Revenue Department will issue a provisional tax return form to the employee requiring him or her to give an estimate of his or her income for the period from commencement to the following 31 March upon receipt of notice of commencement of employment. Immediately after the end of the tax year, the employer will receive a notice requiring him to file an employer’s return to the Inland Revenue Department that shows the actual remuneration accruing to every staff in the year to the preceding 31 March.

On top of that, every employee has (generally in May each year) to complete an individual tax return covering the same period. The employee’s final liability for the year of assessment and provisional tax liability for the succeeding year of assessment will be calculated under the basis of these returns.

Tax payments will be made in January and April. The balance of the final tax for the preceding year of assessment and 75% of the provisional tax for the current year of assessment are paid in January, while the remaining 25% of the provisional tax will be paid immediately after the end of the year of assessment in April.