Hong Kong Tax Facts

Salaries Tax
  • Charged on income from Hong Kong employment or income for services rendered in Hong Kong.
  • Visitors performing services in Hong Kong but staying less than 60 days in a year are exempted.
  • Special rules are applied on housing benefits and share purchase rights.
Tax deductions (maximum)

2003/04
(HK$)

2002/03
(HK$)

Self-Education Expenses

40,000

40,000

Home Loan Interest

100,000

150,000

Elderly Residential Care Expenses

60,000

60,000

Contributions to recognised retirement schemes

12,000

12,000


Personal allowances

2003/04
(HK$)

2002/03
(HK$)

Single

104,000

108,000

Married

208,000

216,000

Child - 1st & 2nd (each)

30,000

30,000

  - 3rd to 9th (each)

30,000

15,000

Dependent parent/grand parent
- basic (each)

30,000

30,000

- additional: residing with taxpayer (each)

30,000

30,000

Single parent

104,000

108,000

Disabled dependent (each)

60,000

60,000

Dependent brother/sister (each)

30,000

30,000


Tax rates (Progressive rates)

2003/04

First $32,500

2%

Next $32,500

7.5%

Next $32,500

13%

Balance

18.5%

Standard rate

15.5%


Tax rates (Progressive rates)

2002/03

First $35,000

2%

Next $35,000

7%

Next $35,000

12%

Balance

17%

Standard rate

15%

Profits Tax

  • Persons, including corporations, carrying on business are liable to Profits Tax on profits arising in Hong Kong.
Tax rates

2003/04

2002/03

Corporations

17.5%

16%

Others

15.5%

15%

  • Dividends received are not taxable.
  • No withholding tax on divided payments.
  • No capital gain tax in Hong Kong.
  • Tax losses may be carried forward (without time limit) to set-off against the future profit.

Offshore Profits

  • Profits from trading activities outside Hong Kong with only goods handling, banking documentation and bookkeeping done in Hong Kong are tax exempted.
  • Profits from local sales but with manufacturing outside Hong Kong (eg. in Mainland China) are taxed on half of the profits only.

Royalties

  • Sums receivable from the use in Hong Kong of a patent, trade mark, design, copyright material, etc, or exhibition or use in Hong Kong of audio visual recording are generally taxed at 1.6%. Related party dealing may be taxed at 16%.
  • Payers who pay royalties to non-residents should withhold tax before paying net to the recipient.

Property Tax

  • Non-corporate owners of properties located in Hong Kong are taxed at 15.5% of the rent receivable after a statutory allowance of 20%.
  • Corporate landlords are subject to Profits Tax.

Interest Income

  • Interest income received by individuals not taxable.
  • Non-Hong Kong sourced interest income received by corporations, partnership and sole proprietor business not taxable (Not applicable to banks).
  • Starting from June 22, 1998, all interest income derised from deposits placed in Hong Kong authorised institutions is, subject to certain conditions, exempted from profits tax.

Stamp Duty

  • Share transaction: 0.2% on transaction amount.
  • Property transaction: 0.75% - 3.75% on transaction amount over HK$1 million.

Estate Duty

  • Charged on the value of assets situated in Hong Kong passing on the death of an individual. Principal value of an estate exceeding HK$7.5 million is taxed at 5% - 15%.

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