For most U.S. taxpayers living and working in Hong Kong, they may also be subject to filing Hong Kong tax returns and paying Hong Kong taxes. Here is a brief introduction to Hong Kong income taxes (salaries tax). Other types of Hong Kong taxes include profits tax and property tax. Hong Kong does not tax dividend income, capital gains and interest income. Hong Kong also has no sales tax, no use tax, no VAT, no gift tax, no estate tax, no social security and no Medicare.
In Hong Kong, unlike the USA, the year of assessment runs from April 1st – March 31st of the following year. For example, the upcoming year of assessment 2016/2017 runs from April 1st, 2016 – March 31st, 2017. After the year of assessment, employers are required to provide employees and the Hong Kong Inland Revenue department copies of completed Employer’s Return of Remuneration and Pensions (Form IR56B), which is used for preparing Hong Kong tax returns.
The chargeable types of income for individual salaries tax include, but are not limited to:
- Salaries/wages and all income and perquisites from the employer or others
- Award of shares and share option gain
- Holiday journey benefits
In addition, most Hong Kong employers generally do not have any type of withholding from salaries like the U.S. This requires taxpayers to ensure they manage their cash flow needs…especially if a taxpayer is subject to U.S and. Hong Kong taxes that may be due in similar time periods. Hong Kong taxes are payable in two instalments with the first usually due just after near year’s time, whereas U.S. estimates can be spread in four quarterly payments. This also leads to careful tax planning to ensure U.S. taxpayers maximize the benefit and understand the implications to maximize their foreign tax credit benefit.
For more detailed information about chargeable incomes, visit: http://www.ird.gov.hk/eng/pdf/bir60_st_e.pdf
For information about tax rates, visit:
Additional Information about Hong Kong tax can be found here:
- General Tax Information — http://www.ird.gov.hk/eng/pdf/bir60_eguide.pdf
- Tax Calculator — http://www.ird.gov.hk/eng/ese/st_comp_2016_17/stcfrm.htm
Please contact us if you have additional questions about Hong Kong and U.S. taxes.