Find in this article all that you need to know on Hong Kong's tax system and how to proceed to pay tax.
On moving to Hong Kong, you will probably have queries regarding taxation. As a foreign national, you will have to pay different types of taxes just like locals and residents. Like in most countries, you are likely to pay individual income tax at a rate of 15% and tax on profits at a rate of 16,5% if you have set up a business there. However, there is no tax on plus values and value added tax (VAT) in Hong Kong. Note that the different types of taxes applied are not deducted at source.
The tax system is managed by the Hong Kong Inland Revenue Department. The tax year starts on the 1st of April to end on the 31th of March of the following year.
Tax system for different profiles
Income tax applies to all persons receiving revenue in Hong Kong, namely employees, retirees, auto-entrepreneurs, etc.
Auto-entrepreneurs, for their part, have to pay tax on benefits. However, companies which are located in Hong Kong but whose operations are carried out elsewhere do not have to pay tax.
Employees receiving taxable income generally receive a tax return BIR60 form (Tax Return – Individuals). Companies, for their part, receive the BIR51 form while auto-entrepreneurs receive the BIR52 form. Non-residents receiving income or benefits in Hong Kong have to fill the BIR54 form. Finally, individuals and companies owning a real estate property in Hong Kong have to fill the BIR57 and BIR58 forms respectively. These forms have to be duly filled and signed and sent to the Inland Revenue Department (IRD). Thereafter, income tax has to be paid before the deadline indicated on the tax assessment issued by the IRD.
In case you have not received any document, you are required to notify the IRD that you are not taxable.
If you are going to pay tax for the first time (in the case of a first job, first tax ceiling reached, benefits, annuities, etc.), you are required to inform the IRD within four months following the end of the tax year. You then have to fill a IR6167 income tax form, or a IR6168 form for tax on benefits, or a IR6129 form for property tax. The following documents have to be produced:
- a handwritten letter
- your identity card or passport number
- your records number
- your postal address
- your phone number (mentioning time schedules when you can be contacted).
There are various ways to pay tax in Hong Kong.
Firstly, you can pay by phone, online or at an ATM. However, you will require a TRC Account Number which you can request from the TRC Section by filling a IR1306 form. Note that you must be in possession of a tax assessment to be able to use this payment mode. The Shroff Account Number for electronic payments, which is a 11-digit number (containing dashes and letters), is printed on this document. The first numbers have to be deleted as you get started. In case of payment by phone or at the ATM, the “A” has to be deleted. Finally, in the case of online payment, some banks will require the “A” while others will not.
If you prefer to make payment by post, you can send a check to the Government of the Hong Kong Special Administrative Region or to the Government of the HKSAR. You are required to write the Shroff Account Number on the back of the check and to follow instructions given in the tax notice. You can then send the letter to the Commissioner of Inland Revenue, P.O. Box 29015, Gloucester Road Post Office, Hong Kong.
On the spot payment is also accepted at regular post offices (except at mobile post offices). You can then pay either in cash or by check. Note that payment can also be made at the Revenue Tower in Wan Chai and at Gloucester Road post office.
Finally, you can send a crossed-check to the address mentioned below if you have a bank account in Hong Kong. You are required to write your reference number, as well as the Shroff Account Number on the back, along with an acknowledgment of payment which you will send to the Commissioner of Inland Revenue, P.O. Box 28282, Gloucester Road Post Office, Hong Kong.
In case you do not have a bank account in Hong Kong, you might as well sent a HKD check or a foreign currency crossed-check in the same order as indicated above and at the same address. However, a foreign currency crossed-check has to bear your tax number and the Shroff Account Number.
Given the variations of exchange rates, you are advised to pay a lightly higher amount that what is mentioned in the tax assessment sent by the IRD. Any excess will be refunded via a HKD check.
Inland Revenue Department – Department of local taxes www.ird.gov.hk/eng/welcome.htm
Inland Revenue Department – Tax Guide www.ird.gov.hk/eng/pdf/pam43e.pdf
Inland Revenue Department – Individual income tax guide www.ird.gov.hk/eng/pdf/bir60_eguide.pdf
Inland Revenue Department – Property tax www.ird.gov.hk/eng/tax/ind_cot.htm
Inland Revenue Department – Tax on profits www.ird.gov.hk/eng/tax/bus_cpt.htm
Indland Revenue Department – Individual income tax http://www.ird.gov.hk/eng/tax/ind.htm
Indland Revenue Department – Corporate tax www.ird.gov.hk/eng/tax/bus.htm
Indland Revenue Department – Employers tax www.ird.gov.hk/eng/tax/ere.htm
IR6167 form – Registration as an individual taxpayer www.ird.gov.hk/eng/pdf/ir6167.pdf
IR6167 form – Registration as an entrepreneur www.ird.gov.hk/eng/pdf/ir6168.pdf
IR6167 form – Registration as an owner www.ird.gov.hk/eng/pdf/ir6129.pdf
IR1306 form – Application for a TRC Account Number www.ird.gov.hk/eng/pdf/ir1306.pdf