Hong Kong (HK)

Hong Kong is one of the world's most dynamic cities — a Special Administrative Region (SAR) of China operating under the 'One Country, Two Systems' framework that preserves its common law legal system, independent judiciary, free port status, and separate currency.

Capital: Hong Kong

Region: Asia

Language: Chinese (Cantonese)

Currency: HKD (HK$)

Cost of living: Very expensive (index 90)

Emergency: 999

Tax & Payslip Guide

Understanding your taxes in Hong Kong — tax year 1 April – 31 March.

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Tax Year

1 April – 31 March

⏰

Filing Deadline

Salaries Tax: IRD issues tax returns (BIR60) in May each year. Paper return deadline: June (approximately 4 weeks after issue). Electronic eTax filing: November deadline (extended by about 5 months). Profits Tax: different deadlines for different balance sheet dates — typically within 1 month of assessment notice. Employers must file employers' returns (IR56B) by April 30.

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VAT (Standard)

None — Hong Kong has NO GST, VAT or sales tax of any kind.

📊 Income Tax Brackets

Income from	Income to	Rate	Notes
0	132,000	0%	Basic personal allowance (基本免稅額) for 2026/27 — tax-free (HK$132,000/year).
132,001	282,000	2%	First band above personal allowance: net chargeable income HK$0–50,000 (after allowances) taxed at 2%.
282,001	432,000	7%	Second band: net chargeable income HK$50,001–100,000 taxed at 7%.
432,001	582,000	12%	Third band: net chargeable income HK$100,001–150,000 taxed at 12%.
582,001	∞	17%	Top rate: net chargeable income above HK$150,000 taxed at 17%. Note: standard rate of 15% on net assessable income (before personal allowances) applies if it results in a lower tax bill — the lower of the two applies.

🏛️ Social Contributions

Mandatory Provident Fund (MPF) — Employee

Employee: 5% of monthly relevant income

Employer: 5% of monthly relevant income

Mandatory pension savings. Employee contributes 5% of monthly salary (HK$30,000 max relevant income → max HK$1,500/month employee contribution). Employer matches at 5%. Employee contributions are tax-deductible up to HK$18,000/year (i.e. HK$1,500 × 12 months). Applies to all employees aged 18–64 with a continuous contract of 60+ days.

Employees Compensation Insurance

Employee: N/A (employer pays)

Employer: Statutory — employer bears full cost

Employers are legally required under the Employees' Compensation Ordinance to take out insurance covering work-related injuries and illnesses. Not deducted from employee salary.

🛒 VAT Rates

None — Hong Kong has NO GST, VAT or sales tax of any kind.

Standard

Hong Kong is a free port. There is no general consumption tax, no capital gains tax, no dividend tax, no inheritance tax, and no estate duty (abolished in 2006). This is one of the most tax-friendly jurisdictions in the developed world.

🧾 Sample Payslip Decoder

Gross Salary HK$50,000/month (HK$600,000/year)

Gross Salary (薪酬) + HK$50,000.00

MPF Employee Contribution (5%, capped at HK$30,000 relevant income) - -HK$1,500.00

Salaries Tax advance budget (monthly provisional — not PAYE withheld; actual tax billed annually by IRD) - -HK$3,500.00

Net Salary (Take-home) ≈ HK$45,000/month

Important: Hong Kong does NOT deduct income tax monthly via PAYE (Pay As You Earn) — unlike the UK or Germany. Instead, the IRD issues a Provisional Salaries Tax assessment once per year (typically November), payable in two instalments (January and April). The deduction shown above (HK$3,500) is an illustrative monthly budget provision only — your actual tax bill is assessed annually. Employer deducts only MPF (HK$1,500 max) monthly. For HK$600,000 gross annual salary, approximate salaries tax (married, no children, MPF deducted): roughly HK$42,000–55,000/year (~7–9% effective rate) under the progressive rates, or 15% standard rate on net assessable income — the IRD uses whichever is lower. Employer also contributes HK$1,500/month to MPF on top of gross salary (employer cost, not deducted from employee).

🌍 Special Expat Tax Rules

No special expat tax regime in Hong Kong, but the low flat rate structure already makes HK one of the world's most tax-efficient places to work. Key allowances for 2026/27: Basic personal allowance HK$132,000; Married person's allowance HK$264,000; Child allowance HK$130,000 (first to ninth child); Dependent parent/grandparent allowance HK$50,000–100,000; Disabled dependant allowance HK$75,000; MPF contributions deductible up to HK$18,000; Self-education expenses up to HK$100,000. Home loan interest deductible up to HK$100,000/year for 20 years.

📋 Double Tax Treaties

Hong Kong has Comprehensive Double Taxation Agreements (CDTAs) with over 45 jurisdictions including: mainland China, UK, Germany, France, Luxembourg, Ireland, Belgium, Netherlands, Austria, Switzerland, Italy, Japan, South Korea, Malaysia, Singapore, Thailand, Vietnam, New Zealand, South Africa, UAE, Mauritius, Canada, Austria, Hungary. Also has Exchange of Information agreements with additional countries. Notable: no CDTA with the USA (but Americans subject to US worldwide taxation regardless).

Inland Revenue Department (IRD / 稅務局)

https://www.ird.gov.hk

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