Hong Kong Tax Calculator
Calculate your annual taxes with this Hong Kong Tax Calculator.
Note: This is a general Hong Kong tax calculator to assist you in calculating your taxes in Hong Kong. This calculator is not a replacement for professional tax advice. If you need help with calculating your tax liability for your Hong Kong company, contact Startupr for more details.
If your company conducted offshore business during the year, You may be eligible for a tax exemption based on your offshore business activities. Startupr has handled hundreds of offshore tax claims with over a 95% success rate for eligible companies. Please contact our tax professionals for more details.
The robust and efficient tax system in Hong Kong has made this international financial hub a destination for business in the region. With a low tax rate and elimination of many tax types in Hong Kong, calculating your potential tax liabilities can be done relatively quickly. Hong Kong companies can also enjoy various tax deductions and exemptions, especially for those who conduct some of their business overseas.
By using this Hong Kong tax calculator, you can easily find how much tax, both profits tax and salary tax in Hong Kong, you would owe in a given year.
Terms from Hong Kong Tax Calculator
This Hong Kong tax calculator includes some basic terms that you would come across when filing out your tax returns in Hong Kong. With a basic overview of your company’s financial accounts, you can get a good understanding of how much tax you would need to pay.
The terms we use are:
- Tax year – This is the tax period your accounts fall under, with the fiscal year in Hong Kong starting in April and ending in the proceeding March. The calculator covers the most recent seven tax years as well as next year, ranging from 2014 to 2021.
- Currency – This is the type of currency your accounts are in. Our Hong Kong Tax Calculator covers 9 different currencies from around the world, including AUD, CAD, CNY, EUR, GBP, HKD, SGD, USD and YEN. In Hong Kong, your company accounts can be reported in any currency.
- Revenue – This is the total turnover (revenue) your company had during the tax year.
- Profit – This is the total profit gained during the year (Total revenue less total costs). Be sure this figure is accurate as it will affect the amount of taxes to be paid.
- Dividend Income – This is the total income gained through dividends the company had through shareholdings. If the company received any dividend income during the year, include it here.
- Personal Salary – This is the total amount of salary the director or an employee received during the year. This should be the calculation per person, as different salary brackets may apply for many individuals.
- Holding Company? – If your company is a holding company (has shares of other companies) tick “yes” here, as this classification may affect your overall tax liability.
- Company conducted offshore business during the year? – If your company conducted business outside of Hong Kong during the year, tick “yes”, as you may be able to apply for a tax exemption based on the details of these transactions.
Types of Taxes in Hong Kong
Hong Kong is known for both its low amount of taxes and number of taxes imposed in the city. There are in general two types of taxes in Hong Kong, corporate profits tax and salaries tax, in which the majority of taxes are paid. The focus on tax in HK and most calculations by accountants are for these two types.
In addition to this, there are other types of taxes you should be aware of, including:
- Salaries Tax
- Property Tax
- Profits Tax
- Stamp Duty Tax
- Betting Duty Tax
- Royalty Tax
- Hotel Accomodation Tax
- Customs and excise duty Tax
These are the taxes that would apply in the city. Hong Kong does not have any capital gains tax, dividend tax, foreign sourced income tax, sales or VAT tax, estate tax, gift duty tax. This elimination of red tape and administration in dealing with recording taxes makes the city an attractive location to conduct business.
Current Tax Rates in Hong Kong
The current tax rates in Hong Kong come in tiers, depending on the type of tax to be paid. For Profits tax for companies, Hong Kong has a two tiered system of taxes. For Salary Tax, there are five different tiers depending on the total amount of taxable income remaining after taking into consider the various tax allowances and deductions.
Both of these Hong Kong taxes have been described in more detail.
Tax Rates for Companies
The tax rate for Hong Kong companies is a two tiered rate, with higher rates on profits above the HKD 2 million threshold. The two tiered profits tax was introduced in Hong Kong from the year 2018/19 onwards, with all profits subject to the single 16.5% tax rate for prior years.
The tax rates in Hong Kong are:
| Profits | Corporations | Unincorporated Businesses |
|---|---|---|
| HKD 0 to 2,000,000 | 8.25% | 7.5% |
| Above HKD 2,000,000 | 16.5% | 15% |
The corporate tax rates apply on the company’s overall profits during the tax year, with the first HKD 2 million being at 8.25% and 7.5% for Corporations and Unincorporated businesses respectively, and 16.% and 15% for profits thereafter. Thus for example if a corporation makes HKD 10 million dollars during the year, the first HKD 2 million would be taxed at 8.25% (HKD 165,000 tax payable) and the remaining HKD 8 million would be taxed at 16.5% (HKD 1,320,000 tax payable), resulting in a total tax payable of HKD 1,485,000.
Important note: Only one company in a group can declare the lower 8.25%/7.5% lower tax bracket. You will need to declare which company can enjoy this lower tax rate in your Profits Tax Return (PTR).
Tax Rates for Individuals
The tax rate for individuals in Hong Kong is based on a tiered system, with 5 different tax brackets depending on your overall chargeable salary income, after allowances and deductions. These tax rates increase with each tier, with the last bracket for the year 2018/19 being HKD 200,000.
The tax rates in Hong Kong for 2018/19 onwards are:
| Net Chargeable Income | Tax Rate |
|---|---|
| HKD 0 to 50,000 | 2% |
| HKD 50,001 to 100,000 | 6% |
| HKD 100,001 to 150,000 | 10% |
| HKD 150,001 to 200,000 | 14% |
| Remainder | 17% |
The result of these different tax brackets makes a standard of 15% tax rate for most Hong Kong individuals. With the Hong Kong tax allowance of HKD 132,000 for single individuals, you would not have any Hong Kong tax until you made over this threshold.
After calculation of your tax payable based on the relevant tax bracket, the amount is further reduced by a tax reduction. The amount in the tax year 2019/20 is 100% reduction for tax payables up to HKD 20,000. Therefore for individuals earning less than HKD 355,530, they would not owe anything in salary tax in Hong Kong.
Need Help Calculating your Hong Kong Taxes?
We hope this Hong Kong Tax Calculator has served as a guide to determine your potential tax liabilities in Hong Kong. After you have a good idea of your potential taxes in Hong Kong, it’s time to connect with a Hong Kong accountant to file your taxes.
In case you need further tax assistance or information for your Hong Kong company, let us know. Startupr has handled thousands of companies accounts and tax filings over the years, and our professionals are experts in the industry of taxation and auditing. Contact us today!