How Hong Kong Salaries Tax Works
Hong Kong has one of the world's simplest and lowest tax systems. Salaries tax is assessed annually under the two-rate system: you pay whichever is lower — progressive rates on net chargeable income (income minus allowances), or a flat standard rate of 15% on net assessable income. In practice, most middle and high earners hit the 15% cap. There is no capital gains tax, no dividend tax, no estate duty, and no GST/VAT in Hong Kong.
| Net Chargeable Income (HKD) | Progressive Rate |
|---|---|
| HK$0 – HK$50,000 | 2% |
| HK$50,001 – HK$100,000 | 6% |
| HK$100,001 – HK$150,000 | 10% |
| HK$150,001 – HK$200,000 | 14% |
| Above HK$200,000 | 17% |
- →Standard rate cap: 15% on net assessable income (before personal allowances) overrides the progressive calculation whenever progressive tax would be higher — most earners above ~HK$400,000 pay 15% flat.
- →Basic allowance: HK$132,000 tax-free (single). Married person's allowance: HK$264,000. Child allowance: HK$120,000 per child.
- →MPF (Mandatory Provident Fund): 5% employee contribution on relevant income (HK$7,100–HK$30,000/month bracket), capped at HK$1,500/month = HK$18,000/year. MPF contributions are deductible.
- →No social security in the traditional sense — MPF is the only mandatory retirement contribution. No unemployment insurance, no income tax-funded health insurance.
- →2024-25 one-off tax reduction: government announced 100% rebate on final tax, capped at HK$3,000 per taxpayer.
- →Salaries tax operates on a self-assessment basis — IRD sends a tax return to file, and sends a demand note after assessment.
- →Married couples can elect joint assessment or personal assessment to minimize combined tax — the IRD calculates both and applies the lower option.
Frequently Asked Questions
When does the 15% standard rate apply instead of progressive rates?
The 15% standard rate applies when it produces a lower tax bill than the progressive calculation. Standard rate tax = 15% × net assessable income (gross income minus allowable deductions but before personal allowances). Progressive tax = applying 2%/6%/10%/14%/17% to net chargeable income (after deducting allowances like the basic HK$132,000 allowance and MPF). For most people earning above approximately HK$400,000–500,000/year, the 15% standard rate wins. Below that threshold, the progressive rates produce a lower bill.
What is MPF and do I have to contribute?
The Mandatory Provident Fund (MPF) is Hong Kong's compulsory retirement savings scheme. Both employees and employers contribute 5% of relevant income each. Employee contribution is capped at HK$1,500/month (HK$18,000/year) for income between HK$7,100–HK$30,000/month. Above HK$30,000/month, the cap means you contribute a fixed HK$1,500 regardless. Voluntary contributions above the mandatory amount are possible and the mandatory employee contributions (up to HK$18,000/year) are deductible from salaries tax.
Does Hong Kong have tax on rental income, dividends, or capital gains?
Rental income from Hong Kong properties is subject to Property Tax at 15% of net assessable value (after 20% statutory deduction for repairs). However, if you are already paying salaries tax, you can elect personal assessment to consolidate all income — the mortgage interest on a rental property is then deductible. Dividends from Hong Kong companies: completely tax-free. Capital gains: completely tax-free — there is no capital gains tax in Hong Kong whatsoever, making it attractive for investors and cryptocurrency holders. Foreign-source income is generally not taxable in Hong Kong.
How do I file my Hong Kong tax return?
The Inland Revenue Department (IRD) issues Individual Tax Return (BIR60) typically in May each year. You must complete and return it within one month (or longer if you file electronically and request extension). Most employees receive a Employer's Return (IR56B) from their employer with salary data already submitted to IRD. You can file via eTAX at etax.ird.gov.hk using HKID + password or iAM Smart app. If no return is issued, you still have a legal obligation to notify the IRD of taxable income within 4 months of the tax year end (March 31). Tax assessments are typically issued in October–November.