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Hong Kong Salaries Tax Guide

Updated:2018-7-5 12:19:01    Source:www.tannet-group.comViews:58

Hong Kong Salaries Tax is charged for most of the personal taxpayers. The Inland Revenue Department (IRD) enacts the Inland Revenue Ordinance (IRO) for salaries tax assessment and collection. The charging of salaries tax in Hong Kong is based on the territorial concept. This means that all income arising in or derived from Hong Kong from an office, employment or any pension is assessable irrespective of whether tax on that income has been paid in other jurisdictions.

Who Need to Pay Salaries Tax?
You can be charged salaries tax on your income arising in or derived from Hong Kong from any employment, office, and pension. In general, if you are a director of a company resident in Hong Kong, your full income derived from that office in Hong Kong is chargeable to salaries tax. This is not affected by the number of days during the year of assessment that you stayed in Hong Kong, and no exemptions or relief are available.

If you are an employee and your source of employment is in Hong Kong, your full income is chargeable to salaries tax even if some of your duties are performed outside of Hong Kong. However, you may claim exemption or relief on a year-by-year basis under certain circumstances.

Tax Rate of Salaries Tax
Unlike flat corporate tax rate, Hong Kong’s salary tax rates follow a progressive tax rate system. There are four marginal tax brackets of 2%, 7%, 12% and 17%. Individuals are taxed at progressive rates on their net chargeable income 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.

How Salaries Tax is computed
Salaries Tax payable is calculated at progressive rates on your net chargeable income or at standard rate on your net income, whichever is lower. A year of assessment runs from 1 April to 31 March of the following year. Provisional Salaries Tax for a year is usually based on the income less the allowances of the preceding year.

Net Chargeable Income = Total Income - Deductions - Allowances
Net Income = Total Income - Deductions

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Contact Us
If you have further enquire, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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