Question

What is the criteria for individual tax system in Hong Kong to see if the individual is chargeable to income tax

Answer 1

Ans:

Hong Kong’s salary tax rates follow a progressive tax rate system. There are five marginal tax brackets of 2%, 6%, 10% and 14% and 17%.

Tax Rates for Individuals
Net Chargeable Income (in HKD currency)	Tax rate
1 – 50,000 HKD	2%
50,001 – 100,000 HKD	6%
100,001 – 150,000 HKD	10%
150,001 – 200,000 HKD	14%
Above 200,000 HKD	17%
Tax rate on capital gains	0%
Tax rate on income earned overseas	0%
Tax rate on dividends from a Hong Kong company	0%

• Individuals are taxed at progressive rates on their net chargeable income (i.e. assessable income after deductions and allowances) starting at 2% and ending at 17%; or at a standard rate of 15% on net income (i.e. income after deductions), whichever is lower.
• There is no capital gains tax, no dividend tax and no inheritance tax in Hong Kong.
• Hong Kong follows a territorial principle of taxation.
• Individuals are taxed only on income that has been “earned in Hong Kong”.
• Hong Kong resident individual taxpayers can potentially reduce their tax burden by electing for personal assessment. Under personal assessment, tax is calculated at progressive tax rates on the aggregated income from all sources.
• A year of assessment runs from April 1st to March 31st of the following year.