Tax Information
Tax Rates
Levied on profits arising in or derived from Hong Kong.
Corporations pay 16.5%
Proprietorships/Partnerships pay 15%
Two-tiered Profits Tax Rates Regime
With effect from the year of assessment 2018/19, under the two-tiered profits tax rates regime, the profits tax rate for the first $2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations and 7.5% (half of the standard rate) for unincorporated businesses (mostly partnerships and sole proprietorships). Assessable profits above $2 million will continue to be subject to the rate of 16.5% for corporations and standard rate of 15% for unincorporated businesses.
Depreciation Allowance
Computer Hardware and software ( 100%)
Plant & Machinery ( 10% – 30% )
Example:
| Category | Initial | Annual |
| Air Conditioning Plant/Lifts | 60% | 10% |
| Furniture and Fixture | 60% | 20% |
| Automobile | 60% | 30% |
Leasehold Improvement: If moveable, can be regarded as furniture or fixture, otherwise, treated as part of the building and only entitled to Rebuilding Allowance.
There are exceptions to the rule. Please contact us for further details.
Example: Rebuilding Allowance on Construction Cost
| Category | Initial | Annual |
| Industrial | 20% | 4% |
| Commercial | – | 4% |
Other Considerations
| Capital Gains | Not taxable |
| Dividends | Not taxable |
| Royalties | If recipient is an unconnected non-resident: i)Proprietorships/Partnerships ~ 4.5%, otherwise ~ 15%ii)Corporation ~ 4.95%, otherwise ~ 16.5% |
| Treatment of loss | Losses made in an accounting year are to be carried forward and set off against future profits of that business. However, it does not apply to changes in shareholding for the purpose of utilizing the tax losses. |
Charged at the standard rate of 15% on 80% of the actual rental income on non-corporate owners i.e. individuals or partnerships. Corporate owners are subject to Profits Tax on their rental income less expenses and are therefore exempt from Property Tax.
Charged on all income arising in or derived from Hong Kong from office and employments.
Tax Rate Table, Allowances and Deductions
(1) Calculation of Tax Payable
Tax payable is calculated at progressive rates on your net chargeable income or
at standard rate on your net income (before deduction of the allowances),
whichever is lower. It is further reduced by the tax reduction, subject to a maximum.
Net Chargeable Income = Income – Deductions – Allowances
| Year of Assessment | 2017/18 | 2018/19 onwards # | ||||
| Net Chargeable Income |
Rate |
Tax |
Net Chargeable Income |
Rate |
Tax |
|
| $ | $ | $ | $ | |||
| On the First | 45,000 | 2% | 900 | 50,000 | 2% | 1,000 |
| On the Next | 45,000 | 7% | 3,150 | 50.000 | 6% | 3,000 |
| On the Next | 90,000 | 4,050 | 100,000 | 4,000 | ||
| 45,000 | 12% | 5,400 | 50.000 | 10% | 5,000 | |
| 135,000 | 9,450 | 150,000 | 9,000 | |||
| On the Next | 50,000 | 14% | 7,000 | |||
| 200,000 | 16,000 | |||||
| Remainder | 17% | 17% | ||||
| Standard | 15% | 15% | ||||
| Rates of Tax | ||||||
Tax Reduction
| Year of Assessment | % of Tax Reduction | Maximum Per Case ($) | Applicable Tax Types |
| 2017/18 | 75% | 30,000 | profits tax, salaries tax and tax under personal assessment |
| 2018/19 & 2019/20 | 100% | 20,000 | profits tax, salaries tax and tax under personal assessment |
| 2020/21 | 100% | 10,000 | profits tax, salaries tax and tax under personal assessment |
(2) Allowances
| Year of Assessment | 2018/19 | |
| 2017/18 | onwards # | |
| $ | $ | |
| Basic Allowance | 132,000 | 132,000 |
| Married Person’s Allowance | 264,000 | 264,000 |
| Child Allowance (For each of the 1st to 9th child) | 100,000 | 120,000 |
| For each child born during the year, the Child Allowance will be increased by | 100,000 | 120,000 |
| Dependent Brother or Sister Allowance (For each dependant) | 37,500 | 37,500 |
| Dependent Parent and Dependent Grandparent Allowance(For each dependant) | ||
| Parent / grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme | 46,000 | 50,000 |
| Parent / grandparent aged 55 or above but below 60 | 23,000 | 25,000 |
| Additional Dependent Parent and Dependent Grandparent Allowance | ||
| Parent / grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme | 46,000 | 50,000 |
| Parent / grandparent aged 55 or above but below 60 | 23,000 | 25,000 |
| Single Parent Allowance | 132,000 | 132,000 |
| Personal Disability Allowance | – | 75,000 |
| Disabled Dependant Allowance (For each dependant) | 75,000 | 75,000 |
(3) Deductions – Maximum Limits
| 2018/19 | ||
| Year of Assessment | 2017/18 | onwards # |
| $ | $ | |
| Expenses of Self-Education | 100,000 | 100,000 |
| Elderly Residential Care Expenses | 92,000 | 100,000 |
| Home Loan Interest | 100,000 | 100,000 |
| Mandatory Contributions to Recognized Retirement Schemes | 18,000 | 18,000 |
| Approved Charitable Donations [(Income – Allowable Expenses – Depreciation Allowances) x Percentage ] | 35% | 35% |
# until superseded
Stamp Duty Rates
On Sale or Transfer of Immovable Property in Hong Kong
With effect from 5 November 2016, Scale 1 AVD rates are divided into Part 1 and Part 2. Part 1 of Scale 1 applies to instruments of residential property and Part 2 of Scale 1 applies to instruments of non-residential property and certain instruments of residential property executed on or after 23 February 2013 but before 5 November 2016. Part 2 of Scale 1 is in essence the prevailing AVD at Scale 1 rates before 5 November 2016.
Part 1 of Scale 1 (Applicable to instruments of residential property executed on or after 5 November 2016 ):
A flat rate of 15% of the consideration or value of the property (whichever is the higher)
Part 2 of Scale 1 (Applicable to instruments of residential property executed on or after 23 February 2013 but before 5 November 2016 and instruments of non-residential property executed on or after 23 February 2013):
(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)
|
Amount or value of the consideration (whichever is the higher) |
Rates at Scale 1 (Part 2) |
||
| Exceeds | Does not exceed | ||
|
|
$2,000,000 | 1.5% | |
| $2,000,000 | $2,176,470 | $30,000 + 20% of excess over $2,000,000 | |
| $2,176,470 | $3,000,000 | 3% | |
| $3,000,000 | $3,290,330 | $90,000 + 20% of excess over $3,000,000 | |
| $3,290,330 | $4,000,000 | 4.5% | |
| $4,000,000 | $4,428,580 | $180,000 + 20% of excess over $4,000,000 | |
| $4,428,580 | $6,000,000 | 6% | |
| $6,000,000 | $6,720,000 | $360,000 + 20% of excess over $6,000,000 | |
| $6,720,000 | $20,000,000 | 7.5% | |
| $20,000,000 | $21,739,130 | $1,500,000 + 20% of excess over $20,000,000 | |
| $21,739,130 | 8.5% | ||
With effect from 1 April 2010, stamp duty on sale of immovable property in Hong Kong is charged at rates which vary with the amount or value of the consideration as follows:
(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)
|
Amount or value of the consideration (whichever is the higher) |
Rates at Scale 2 |
||
| Exceeds | Does not exceed | ||
|
|
$2,000,000 | $100 | |
| $2,000,000 | $2,351,760 | $100 + 10% of excess over $2,000,000 | |
| $2,351,760 | $3,000,000 | 1.5% | |
| $3,000,000 | $3,290,320 | $45,000 + 10% of excess over $3,000,000 | |
| $3,290,320 | $4,000,000 | 2.25% | |
| $4,000,000 | $4,428,570 | $90,000 + 10% of excess over $4,000,000 | |
| $4,428,570 | $6,000,000 | 3% | |
| $6,000,000 | $6,720,000 | $180,000 + 10% of excess over $6,000,000 | |
| $6,720,000 | $20,000,000 | 3.75% | |
| $20,000,000 | $21,739,120 | $750,000 + 10% of excess over $20,000,000 | |
| $21,739,120 | 4.25% | ||
With effect from 1 April 1999, the exact amount or value of the consideration will be used to compute the stamp duty for property transfers. That is, round-up of the value or consideration to the nearest $100 is no more required.
With effect from 31 January 1992, stamp duty at the same rates as conveyances of immovable property is chargeable on agreements for the sale and purchase of residential property. After the agreement has been so stamped, the related conveyance will be chargeable with a fixed stamp duty of $100 only.
SSD is calculated by reference to the stated consideration or the market value of the property (whichever is the higher), at the following rates for different holding periods of the property by the seller or transferor before disposal –
|
Holding period |
The property was acquired on or after 20 November 2010 and before 27 October 2012 |
The property was acquired on or after 27 October 2012 |
| 6 months or less |
15% |
20% |
| More than 6 months but for 12 months or less |
10% |
15% |
| More than 12 months but for 24 months or less |
5% |
10% |
| More than 24 months but for 36 months or less |
– |
10% |
With effect from 27 October 2012, unless specifically exempted, Buyer’s Stamp Duty (BSD) is payable on an agreement for sale or a conveyance on sale executed for the acquisition of any residential property. BSD is charged at 15% on the stated consideration or the market value of the property (whichever is the higher).
On Lease of Immovable Property in Hong Kong
Stamp duty is calculated at rates which vary with the term of the lease as follows:
(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)
|
Term |
Rate |
|
|
Not defined or is uncertain |
0.25% x of the yearly or average yearly rent (Note 1) | |
|
Exceeds |
Does not exceed |
|
|
|
1 year |
0.25% x of the total rent payable over the term of the lease (Note 1) |
|
1 year |
3 years |
0.5% x of the yearly or average yearly rent (Note 1) |
|
3 years |
. |
1% x of the yearly or average yearly rent (Note 1) |
| Key money, construction fee etc. mentioned in the lease | 4.25% of the consideration if rent is also payable under the lease. Otherwise, same duty as for a sale of immovable property | |
| Duplicate or counterpart | $5 each | |
Note 1: The yearly rent / average yearly rent / total rent has to be rounded-up to the nearest $100
On Transfer of Hong Kong Stock
With effect from 1 September 2001, stamp duty on sale or purchase of any Hong Kong stock is charged at rate which vary with the amount or value of the consideration as follows:
(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)
|
Nature of Document |
Rate |
| Contract Note for sale or purchase of any Hong Kong stock | 0.1% of the amount of the consideration or of its value on every sold note and every bought note |
| Transfer operating as a voluntary disposition inter vivos | $5 + 0.2% of the value of the stock |
| Transfer of any other kind | $5 |