Account and Taxation
Hong Kong is adopting the low and simple tax system, where has attracted many local and foreign enterprises to develop their businesses.
There are only three types of Direct tax levied in Hong Kong, which are Profit tax, Salaries tax and Property tax, while others common indirect taxes such as Value-added tax (VAT), Sales tax and Estate Duty are not imposed.
Whether you are an individual and a business, Auditing and Tax return is a dauting and unforgiving time. Most taxpayers always prolong due to irritating procedures and end up with a penalty.
In fact, if you appoint the appropriate and professional advisor in time, everything will become easier and simple. Also, you will not only avoid the troublesome taxation or delayed penalty, but also received the professional advice which avoid overpaying tax.
It is not rare that staff salaries are one of the major expenses for SMEs in Hong Kong.
In Hong Kong, it is easily costing over HK$10,000 a month for hiring a slightly experienced bookkeeper to handle tax matters. If you need assistance from a CPA firm, it may cost even higher. But now, you have another option. With our rich experience in dealing with accounting and taxation issues, we could provide the best solutions for you.
Focus on developing your business, just let us to handle it!
- Book-keeping & stock taking
- Preparing financial statements
- Preparing tax computation schedule
- Filing tax returns
- Replying letters from IRD
Book-keeping & stock taking
Preparing financial statements
Preparing tax computation schedule
Filing tax returns
Replying letters from IRD
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(852) 2159 8001
About Hong Kong Taxation
Persons who are carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits arising in or derived from Hong Kong.
At present, Profit Tax can be calculated at the standard tax rate and two-tiered tax rate. The standard tax rate of 16.5% and 15% are applied to the assessable profits of Corporations (E.g., Limited Company) and sole proprietorships or partnerships respectively. Generally, tax reduction is allowed for outgoings and expenses arising from carrying on of a business such as rental fee, employees’ salaries, the contribution of Mandatory Provident Fund scheme (only eligible for unincorporated businesses), and interests on borrowings.
Starting in 2018/19, the Inland Revenue Department (IRD) has added a two-tier tax rate to benefit SMEs.
The tax rate for the first HK$2 million profit of the corporation’s business is 8.25%, and subsequent profits are taxed at the standard rate of 16.5%;
For details on the definition of connected entities and the two-tiered profits tax system, please call our professional advisors at 2159 8001 to avoid misreporting or underreporting.
Any income derived by an individual from employment, offices and pension in Hong Kong is taxable. If you received an Individual Tax Return (BIR60), you must declare to IRD for income declaration even if there is without chargeable income.
Presently, Salaries Tax can be calculated at the standard rate and progressive rates.
1. The standard rate is calculated at 15% of net income.
2. Progressive rate, also known as marginal tax rate, are payable at different tax bands and are detailed in the chart below,
Tax rate of the assessment year 2020/21
Net chargeable income (HKD)
|On the First 50,000||2%|
|On the Next 50,000||6%|
|On the Next 50,000||10%|
|On the Next 50,000||14%|
Taxpayers may claim allowances and tax reduction. A common allowance included Approved Charitable Donations, Contributions to MPF Scheme or Recognized Occupational Retirement Scheme, Outgoings and Expenses that are wholly, exclusively and necessarily incurred in the production of the assessable income.
In every year of assessment, each person is entitled to a basic allowance unless you are married and have been granted the married person’s allowance for the year.
Other allowances also include Child Allowance, Dependent Parent Allowance, Dependent Grand-parent Allowance, Dependent Brother or Sister Allowance, Single Parent Allowance, Disabled Dependent Allowance and Personal Disability Allowance.
For more details on Allowance, please refer toGovHK website.
The Government has proposed that a 100% reduction in salaries tax and tax under personal assessment for the year of assessment 2020/21, subject to a ceiling of HKD10,000. (To be implemented upon approved of the IRD Ordinance)
Rents received from sole-owned rental properties of landlord(s) in Hong Kong are chargeable.
Currently, Property Tax is calculated on the net assessable value (i.e. net rental income) for the year of assessment at the standard rate of 15%.
Net rental income is defined as Rental Income less irrecoverable rent, rates paid by owner and repairs.
However, in order to simplify the administration of tax assessment, the IRD will automatically deduct 20% of the net rental income as the statutory allowance for repairs and outgoings.
The 20% statutory allowance includes expenses incurred in renting out the property, such as government rent, building renovation fees, rent-collection fees, building management fees, insurance and mortgage interest, etc. Landlords are not required to provide the IRD with any evidence of the actual expenses incurred.