Hong Kong Salaries Tax

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Hong Kong
Salaries Tax

Tax levied on chargeable incomes of individuals is known as salaries tax in Hong Kong,
which charges one of the lowest corporate and individual taxes in the world. Hong Kong
follows a territorial taxation policy whereby tax is charged only on the incomes earned in
Hong Kong. A Hong Kong tax resident who has paid taxes in the Mainland on his/her
income derived from services rendered in the Mainland may claim for a tax credit under
section 50 and the Comprehensive Arrangement. Dividends are tax exempted, and there is
no capital gains tax or inheritance tax. The Year of Assessment (YA) runs from 1 April to 31
March the following year.
There are no exemptions available on chargeable income. Notably, individuals are subjected to a
progressive tax rate starting from 2% and capped at 17% on their net chargeable income or at a
standard rate of 15% on the net income, whichever is lower.
The following progressive tax rates are applicable on the net chargeable income of individuals
# Until superseded
Copyright © 2019 · Hong Kong Company Registration. All rights reserved.
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Last updated Dec 2019 | 1
+852 2780 0607Hong Kong Salaries Tax
Progressive Tax Rates
Year of Assessment 2018/19 onwards#
NET CHARGEABLE INCOME ($) RATE TAX ($)
On the First
On the Next
On the Next
On the Next
Remainder
50,000
50,000
100,000
50,000
150,000
50,000
200,000
2%
6%
10%
14%
17%
1,000
3,000
4,000
5,000
9,000
7,000
16,000

Net chargeable income is calculated by
deducting allowable deductions and
allowances from the total income of the
individual.
The Total income of individuals includes
salaries, wages and director’s fees as well as
commissions and bonuses. It will also include
any encashment of leave, and gratuities paid
at the end of contract or payments received in
lieu of notice. The following benefits and
perks will also be treated as part of total
income:
It must be noted that severance payments
and long service payments that are payable to
an employee under the Employment
Ordinance and are not in excess of his/her
entitlement are not assessable income.
Calculating Net
Chargeable Income
Pensions, termination payments and
retirement benefits including accrued
benefits received from recognized
occupational retirement schemes or
receipt or deemed receipt from
mandatory provident fund schemes.
Back pay, gratuities, deferred pay and
pay-in-arrears
Stock awards and share options offered by
the employer
Tips received from the employer or any
other person
The rental value of a place of residence
that has been provided by the employer
Salaries tax paid by the employer
Cash allowances, fringe benefits, the
liability of employees discharged by
employers, convertible benefits,
education benefits, and holiday journey
benefits.
Besides the outgoings and expenses that are
wholly, exclusively and necessarily incurred in
the generation of the assessable income, the
following deductions can be claimed by an
individual from his/her total income.
Deductions

DEDUCTIONS:
Qualifying premiums paid under Voluntary Health Insurance Scheme (VHIS)
CLAIMABLE AMOUNT:
The specified maximum deduction for the year of assessment 2019/20 onwards is $8,000.
CLAIMABLE CONDITIONS:
Claimable for qualifying premiums paid by the individual or his/her spouse as a policyholder for an
insured person – the individual or specified relative – and must be a
HKID cardholder at any time during the year of assessment; or
The deduction allowable to each taxpayer for each insured person should not exceed the qualifying
premiums paid or the specified maximum deduction, whichever is lower.
Specified relative is the
There is no cap on the number of specified relatives claimed by a taxpayer. Deductions can be claimed
for premiums paid for the same insured person under one or more than one VHIS policy. In case of
more than one policyholders, the premium shall be deemed to have been paid equally by all
taxpayers. Extending this provision, more than one taxpayer can claim a deduction for the same
insured person.
in the case of a child aged below 11 years and who does not hold an HKID, the child’s biological or
adoptive parents must be an HKID cardholder when the insured person was born or adopted.
Taxpayer’s spouse;
Taxpayer’s or his/her spouse’s parent/grandparent, who is aged 55 or more; or under the age of 55
but eligible to claim an allowance under the Government’s Disability Allowance Scheme;
Taxpayer’s or his/her spouse’s child or sibling, who is at any time during the year of assessment
unmarried and
under 18 years of age; or,
aged between 18 and 25 years and pursuing full-time studies at school or university; or,
over 18 years of age but is unable to work due to physical or mental disabilities.

DEDUCTIONS:
Tax Deductions for Qualifying Annuity Premiums and Tax Deductible MPF Voluntary
Contributions
CLAIMABLE AMOUNT:
The specified maximum deduction (the aggregate limits for both QDAP and TVC) for the
year of assessment 2019/20 onwards is $60,000.
Claimable on qualifying annuity premiums and tax-deductible MPF voluntary contributions (TVC)
paid by the taxpayer or his/her spouse as a policyholder of a Qualifying Deferred Annuity Policy (QDAP)
for an annuity payment receivable by an annuitant. It is applicable to a year of assessment
commencing on or after 1 April 2019.
To qualify the QDAP must be certified by the Insurance Authority to be in compliance and regular
payment must be receivable under the policy by an annuitant during an annuity period. The
policyholder, the annuitant and person making the annuity premiums must be the taxpayer, or
his/her spouse or the taxpayer and his/her spouse.
To qualify the TVC must be paid into a TVC account defined under the Mandatory Provident Fund
Schemes Ordinance. The taxpayer must be the TVC account holder.
The deductible amount is the net of the refunds, and total allowable deductions cannot exceed the
aggregate of qualifying annuity premiums and tax-deductible MPF voluntary contributions paid
during the year of assessment or the specified maximum deduction, whichever is lower.
Deductions can be claimed for premiums paid for more than one policy; there is no cap on QDAP.
CLAIMABLE AMOUNT:
The aggregate deduction of approved charitable donations cannot be less than $100. The
aggregate deduction shall not exceed 35% of the income after allowable expenses and
depreciation allowances or assessable profits.
Claimable on donations made (but not claimed by the spouse of the taxpayer) to any charity that is
exempted from tax under section 88 of the Inland Revenue Ordinance or to the Government for
charitable purposes.
Not all payments to tax-exempt charities are deductible. Example payments made for goods or
services, raffle tickets etc.
DEDUCTIONS:
Approved Charitable Donations

DEDUCTIONS:
Contributions to a Mandatory Provident Fund Scheme or Recognized Occupational
Retirement Scheme
DEDUCTIONS:
Home Loan Interest
Claimable on expenses on tuition fee and the related examination fee paid for a prescribed course of
education offered by a education provider, or a trade/professional/business association or a course
accredited or recognised by an institution specified by Schedule 13 of IRO, for gaining or maintaining
qualifications for use in either a current or a planned employment.
Claimable on the net amount paid after reimbursements, if any. Must be claimed in the year of
payment.
DEDUCTIONS:
Expenses of Self-education
CLAIMABLE AMOUNT:
HK$100,000
Mandatory contributions to MPF schemes are deductible in computing your assessable income as an
employee or assessable profits as a self-employed person’s own contribution.
CLAIMABLE AMOUNT:
HK$18,000
CLAIMABLE AMOUNT:
HK$100,000 a year for up to 20 years (not necessarily consecutive)
Claimable for interest paid during the year of assessment on loan for the acquisition of a dwelling
situated in Hong Kong and any car parking space located in the same development of the dwelling.
The following conditions must be fulfilled:
The taxpayer is either a sole owner, a joint tenant or a tenant in common as shown in the records of the Land
Registry;
The dwelling is a separate rateable unit under the Rating Ordinance: that is, it is situated in Hong Kong;
the dwelling is used wholly or partly as the taxpayer’s place of residence in the year of assessment.
the loan is secured by a mortgage or charge over the dwelling or over any other property in Hong Kong; and
the lender is an organisation prescribed under section 26E(9) of the Inland Revenue Ordinance (IRO)

It must be noted that if
the taxpayer is a joint owner, the claimable interest paid shall be regarded as equally paid by the
joint tenants, and in the case of tenants in common, it shall be deemed to be paid in proportion to
the share of each tenant in common. The claimable amount shall be the apportioned interest.
the dwelling is partly used as the place of residence, the amount of interest deductible will be
restricted accordingly);
interest was paid before the dwelling is used, it shall not be claimable.
the taxpayer owns multiple places of residence, then claims can be made only against interest
paid towards a principle place of residence.
It must be noted that if
A deduction can be claimed separately on the share of interest in the case of joint ownership.
If one of them has income less than the total of allowable interest and personal allowances, then
they can elect for joint assessment so that the interest is deductible from the aggregate
assessable income.
If one of them as the owner of the house has no chargeable income due to loss or otherwise he/she
can nominate the spouse to claim the deduction. It must be noted that nominations must be
made year by year, and the nominating spouse must sign the nominee’s tax return to signify his or
her agreement to the nomination.
In the case of personal assessment, the allowable HLI is ﬁrst deducted from the total income of the
one who paid the HLI. Any part of the deduction not fully utilised is then set off against the other’s
total income.
DEDUCTIONS:
Elderly Residential Care Expenses
CLAIMABLE AMOUNT:
HK$100,000
Claimable on payments made in the year of assessment to a residential care home for the care of a
parent or grandparent (biological, step, adoptive) of the taxpayer or his/her alive or deceased spouse.
A person who is chargeable to tax at the standard rate is also entitled to the deduction.

The following conditions must be satisﬁed:
The parent or grandparent is 60 years old or above, or otherwise entitled to claim an allowance
under the Government’s Disability Allowance Scheme.
The expenses were paid to a residential care home or any person acting on its behalf.
The residential care home is situated in Hong Kong and is licensed or exempted from licensing or
is a registered nursing home.
It must be noted that claims can be made on the net amount paid after reimbursements. Only one
person can be granted the deduction for the same parent or grandparent for a year of assessment. In
case of other potential claimants, it must be mutually agreed between them on who shall claim a
deduction for the year of assessment.
ALLOWANCE TYPE:
Basic Allowance
CLAIMABLE AMOUNT:
HK$132,000
Claimable by all individuals
All allowances should normally be claimed on
your Tax Return – Individuals (BIR60) during
the year of assessment to which they are
related. Late claims are possible but the
written claim should not be later than 6 years
from the relevant year of assessment. In every
year of assessment the following allowances
are available for deduction from total
incomes.
Allowances

ALLOWANCE TYPE:
Married person’s allowance
CLAIMABLE AMOUNT:
HK$264,000
Claimable in any year of assessment if the individual is married at any time during that year and
maintaining or supporting the spouse regardless of staying together or apart, and the spouse did not
have any chargeable income in the year, or the individual and the souse have elected for joint
assessment or personal assessment jointly for the year.
ALLOWANCE TYPE:
Married person’s allowance
CLAIMABLE AMOUNT:
HK$264,000
Claimable in any year of assessment if the individual is married at any time during that year and
maintaining or supporting the spouse regardless of staying together or apart, and the spouse did not
have any chargeable income in the year, or the individual and the souse have elected for joint
assessment or personal assessment jointly for the year.
ALLOWANCE TYPE:
Child allowance
Claimable if during the year of assessment the individual maintains an unmarried child ( biological,
adopted or step-child) who is
Note: In the case of both husband and wife with chargeable income, the allowance must be claimed
by one with the higher income and in the case of husband and wife with chargeable income and one
of them is assessed at standard rate, the allowance must be claimed by the one whose income is not
assessed at standard rate.
CLAIMABLE AMOUNT:
HK$120,000 for each of the 1st to 9th child. For each child born during the year, the allowance
will be increased by HK$120,000
under 18 years old; or,

ALLOWANCE TYPE:
Dependent Brother or sister allowance
CLAIMABLE AMOUNT:
HK$37,500 for each dependent.
Claimable if the individual or his/her spouse maintains an unmarried brother or sister ( full/half-blood,
adopted, step, or biological child of the individual’s or his/her spouse’s adoptive parents or the siblings
of a deceased spouse) who at any time during the year of assessment was:
To be deemed to have maintained, the claimant must have solely or predominantly cared of the
brother or sister. In case of another potential claimant, the claimants must mutually agree on who
shall make a claim. In the event of disagreement, no allowance shall be granted.
under 18 years old; or
ALLOWANCE TYPE:
Dependent Parent Grand Parent
CLAIMABLE AMOUNT:
HK$50,000 for each parent/grandparent aged 60 or more. HK$25,000 for each
parent/grandparent aged between 55 and 59. HK$50,000 additional dependent
parent/grandparent allowance for each parent/grandparent aged 60 or more. HK$25,000
additional dependent parent/grandparent allowance for each parent/grandparent aged
between 55 and 59.
Claimable for each dependent parent/grandparent (biological/adoptive/step-parent/grandparent of
the individual or his her spouse or deceased spouse) maintained by the individual or his/her spouse
not living apart. To qualify for the allowance, the dependent parent/grandparent must at any time
during the year be:
The individual is entitled to Additional Dependent Parent and Grandparent Allowance if the
dependent parent/grad parent resided continuously throughout the whole year.
ordinarily resident in Hong Kong[i];
aged 55 or more, or eligible to claim an allowance under the Government’s Disability Allowance
Scheme; and
resided with the individual or his/her spouse for a continuous period of not less than six months
without paying the full cost or have received from the individual or his/her spouse not less than
$12,000 in money towards his/her maintenance.

ALLOWANCE TYPE:
Single Parent Allowance
CLAIMABLE AMOUNT:
HK$132,000
Claimable if the individual has undertaken the ongoing responsibility for care and supervision of
his/her child; and the individual was not married at any point during the year of claim, and was
granted a child allowance for the year of claim.
It must be noted that the single parent allowance is granted on time spent on care and supervision,
whereas the child allowance is granted on money spent on maintenance and education. Single parent
allowance cannot be availed for monetary contributions made towards the education or maintenance
of the child. No allowance will be granted on the second or subsequent child.
In the case of divorce or separation, and if both parents want to claim the allowance, will be
apportioned according to the time, the child was predominantly or solely cared for by the claimants.
In case of dispute, the Commissioner will decide the basis of apportionment.
ALLOWANCE TYPE:
Disabled Dependent Allowance
CLAIMABLE AMOUNT:
HK$75,000 for each dependent
Claimable if the individual or his/her spouse maintains a dependent (spouse or
child/parent/grandparent/brother/sister of the individual or his/her spouse) who claims an allowance
under the Government’s Disability Allowance Scheme.
It must be noted that this allowance is in addition to the married person’s allowance, or child
allowance, or dependent parent and grandparent allowance or elderly residential care expenses; or
dependent brother or dependent sister allowance.
ALLOWANCE TYPE:
Disabled Dependent Allowance
CLAIMABLE AMOUNT:
HK$75,000 for each dependent
Claimable if the individual is a claimant of the Government’s Disability Allowance Scheme.

Filing Tax Return
[i] To determine whether a dependant is ordinarily resident in Hong Kong, the Inland Revenue Department may
consider objective factors including: (i) the number of days he/she stayed in Hong Kong, the frequency of his / her visit
to Hong Kong and the length of each stay; (ii) whether he/she has a permanent dwelling in Hong Kong; (iii) whether
he/she owns a property for residence outside Hong Kong; (iv) whether he/she works or carries out a business in Hong
Kong ; (v) whether his/her relatives are mainly residing in Hong Kong.
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Annual tax returns must be filed with the
Inland Revenue Department (IRD) within one
month from the date of issue of individual tax
returns, which the IRD sends by May 1 of each
year. Sole proprietors can file the returns
within three months from the date of issue.
Even if a taxpayer does not have income in a
year of assessment, must still need to declare
zero income in the tax form.
Returns can be filed online or by postal mail.
The IRD will send a notice of assessment
indicating the amount of tax payable for the
year of assessment. In the event of an
objection, IRD must be informed within 30
days from the issue of notice of assessment. If
there is a delay in filing the return, the IRD
may issue an estimated assessment. The tax
must be paid on or before the due date
specified in the notice of assessment failing
which the IRD may impose penalties.

Copyright © 2019 • Hong Kong Company Registration. All rights reserved.
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Kowloon, Hong Kong
+852 2780 0607
info@hkcompanyregistration.com
hkcompanyregistration.com
The information contained herein is intended for
general information purposes only and shall not be
regarded as professional advice. Readers are therefore
advised that before acting on any matter arising from
these notes, they should discuss their particular
situation with the Firm. No liability can be accepted
for any action taken as result of reading the notes
without prior consultation with regard to all relevant
factors.
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Hong Kong Salaries Tax

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