There’s a reason why over 7.5 million individuals live in Hong Kong. This international city attracts people from all over the world, and it’s not hard to see why.

Not only is the city a great site to do business with new market segments, but it also offers one of the friendliest tax regimes in the world. If you’re considering moving your business to Hong Kong, then there are certain things that you should know right off the bat about this tax system.

Luckily, in this article, we assembled what we consider to be the three most important things that everyone should know about the Hong Kong tax system. Let’s take a look!

1. All Residents Need to Report Income Made in Hong Kong

Hong Kong uses a territorial tax system. That means that anyone who is a resident of the city, whether they’re a person or a corporation, is taxed on income that they make in Hong Kong.

However, there is an important caveat. Only domestic income is taxed. That means that any income that comes from a foreign source doesn’t need to be taxed.

In addition to this, someone who doesn’t live in the country, but visits for more than sixty days, must also report any income that was earned.

2. Familiarity With the Tax Rates

There are two ways that tax rates are determined in Hong Kong. The first way is through a progressive rate that’s charged on viable net income. The other way is a standard rate of 15% on net income.

The taxpayer will choose whichever version costs less for them. The progressive rate is as follows:

  • 2% for 0-50,000 HKD
  • 6% for 50,001-100,000 HKD
  • 10% for 100,001-150,000 HKD
  • 14% for 150,001-200,000 HKD
  • 17% for 200,000 HKD and above

3. You Will Likely Need the Help of a Tax Professional

Keep in mind that this is just the type of the iceberg when it comes to Hong Kong taxes. The reality is that if you haven’t studied HK tax law, or been in the city for most of your life, then there are likely things that you will miss.

This is especially true if you don’t speak the language well. As such, we always recommend hiring a tax professional. That way, they can keep you informed on all of the deadlines and laws that you might not be aware of.

Enjoy Learning About the Hong Kong Tax System? Keep Reading

We hope this article helped you learn more about the Hong Kong tax system. Keep in mind that this is far from an exhaustive list. As such, you should always consult with a tax specialist that studies Hong Kong law.

That way, you know that you’re being compliant with both local and international laws. Did you enjoy this article? If the answer is yes, then you’re in the right place. Keep exploring to find more topics that you’re sure to love.