Hong Kong Tax System Explained: What Is Taxed, the Rates and the Tax Year.

What Hong Kong taxes, and on what basis

Hong Kong tax is narrow by design. The government taxes three kinds of income, each under its own tax: business profits under profits tax, property rental income under property tax and employment income under salaries tax. Income outside those three schedules is not taxed at all, and there is no VAT, sales tax, capital gains tax or estate duty.

Two principles explain most of what follows. The first is that each tax stands alone, with its own rules, its own return and its own rates. Hong Kong has no single income tax that adds everything together, although individuals can choose to combine their income in one calculation (personal assessment, covered below).

The second is the territorial source principle. Only profits and income arising in or derived from Hong Kong are taxed, and for profits tax the Inland Revenue Department (IRD) makes no distinction between residents and non-residents. A Hong Kong company can earn profits abroad without paying Hong Kong tax on them, even when it brings the money home, while a non-resident can owe tax on profits made here. Where profits arise is largely a question of fact, which is why the source question carries so much weight in Hong Kong.

Hong Kong tax rates at a glance

The headline rates below are the same for the 2025/26 and 2026/27 years of assessment. What changed between the two years is mostly allowances and one-off relief, covered further down.

Source: Inland Revenue Department and GovHK. Checked October 2026.

Profits tax: what businesses pay

Corporations, partnerships, trustees and other bodies carrying on a trade, profession or business in Hong Kong pay profits tax on the profits that business makes here. Profits from selling capital assets are excluded. The line between capital and trading matters, though: the IRD treats someone who sells a flat as part of a scheme of profit-making as running a business, and taxes the gain.

Since 2018/19 the first HK$2 million of assessable profits has been taxed at half the normal rate, so a corporation pays 8.25% on that slice and 16.5% on the rest. Partnerships and sole proprietors pay 7.5% and 15%. Where businesses are connected through common ownership or control, only the one entity the group nominates gets the lower tier; the others pay the full rate on everything. Some sectors also have concessionary rates, such as qualifying corporate treasury centres, aircraft and ship leasing businesses and professional reinsurers.

A corporation generally submits audited financial statements with its profits tax return, dormant companies being one of the few exceptions. In practice the return waits on the audit, so a company needs an audit firm in Hong Kong engaged well before the filing deadline. Our guide to choosing a certified public accountant in Hong Kong explains how to check who can sign the audit. For the tax side itself, profits tax services in Hong Kong cover the computation, the return and questions about where profits arise.

Salaries tax: tax on employment income

Salaries tax applies to income from employment, office or pension arising in or derived from Hong Kong. Almost everything an employer pays counts: salary, bonuses, commissions, leave pay, cash allowances, share awards and most benefits. Housing provided by an employer is taxed through a rental value, normally 10% of the income from that employer.

The bill is worked out two ways, and you pay the lower result. Under the salaries tax rates published on GovHK:

• Progressive rates apply to net chargeable income, meaning income after deductions and allowances: 2%, 6%, 10% and 14% on successive bands of HK$50,000, then 17% on the remainder.
• The standard rate applies to net income, meaning income after deductions but before allowances: 15% on the first HK$5 million and 16% on anything above it, from 2024/25 onwards.

Allowances do most of the work for ordinary earners. The basic allowance is HK$132,000 for 2025/26 and rises to HK$145,000 from 2026/27, and the married person's allowance rises from HK$264,000 to HK$290,000. At the top end, GovHK puts the income at which a single person with no deductions reaches the standard rate at HK$2,132,500 for 2026/27. Deductions such as self-education expenses and approved charitable donations come off before either calculation.

Because the test is where the income arises, salaries tax applies to Hong Kong employment income whatever the employee's nationality or visa. If you are moving for a job, our overview of Hong Kong visa options covers the right to work; salaries tax then follows the employment. When a role is split between Hong Kong and elsewhere, or pay includes share awards or a relocation package, the questions get harder, and salaries tax help in Hong Kong covers that review.

Property tax: rent from Hong Kong property

Owners who let land or buildings in Hong Kong pay property tax at the standard rate of 15% on the net assessable value. GovHK sets out the calculation: start with the rent, take off any rent you could not collect and any rates you paid as owner, then take off a flat 20% statutory allowance for repairs and outgoings. On a flat let at HK$10,000 a month with the tenant paying rates, that gives a net assessable value of HK$96,000 and property tax of HK$14,400 for 2025/26.

The 20% is an all-inclusive allowance: management fees, insurance and mortgage interest cannot be claimed on top of it. A Hong Kong resident who lets property or runs a sole proprietorship can instead elect for personal assessment, which adds salaries, business profits and rental income together, allows deductions (including mortgage interest on a let property), and taxes the balance at salaries tax rates. GovHK notes that someone whose only income is a salary gains nothing from electing.

Stamp duty: property, leases and shares

Stamp duty is a charge on documents, and three kinds matter most. The stamp duty rates on GovHK cover each of them.

Property. Ad valorem stamp duty is charged on the price or the value of the property, whichever is higher. It starts at a flat HK$100 for property up to HK$4 million and rises through bands to 4.25%. From 26 February 2026, residential property above HK$100 million moves to a top rate of 6.5%, with marginal relief easing the step, while non-residential property stays capped at 4.25%. Since 28 February 2024, residential buyers pay the same rates whether or not they are Hong Kong permanent residents or already own a home.

Leases. Tenancy agreements are stamped too, generally at 0.25% to 1% of the rent, depending on the length of the lease.

Shares. A sale or purchase of Hong Kong stock is charged 0.1% of the consideration on the bought note and 0.1% on the sold note, so buyer and seller each pay 0.1%.

On a purchase, a property lawyer in Hong Kong can confirm which scale applies and arrange the stamping as part of the conveyancing.

What Hong Kong does not tax

The answer to "is there VAT in Hong Kong?" is no, and the list of absent taxes is long. Each gap has an exception worth knowing.

Source: FSTB, Inland Revenue Department and Customs and Excise Department. Checked October 2026.

The consumption taxes are deliberately narrow. The Customs and Excise Department charges duty on liquor, tobacco, hydrocarbon oil and methyl alcohol, and wine and other drinks of 30% alcohol or less carry a 0% rate. Hotels and guesthouses have charged the 3% hotel accommodation tax again since 1 January 2025, after years at 0%.

Estate duty was abolished for deaths on or after 11 February 2006, so there is no tax on an estate. The family still has to obtain a grant of representation before dealing with the assets, which is the work a probate lawyer in Hong Kong handles.

Two newer regimes reach larger groups. Since 1 January 2023, the foreign-sourced income exemption (FSIE) regime can deem certain foreign dividends, interest, intellectual property income and disposal gains received in Hong Kong by a member of a multinational group to be taxable, unless an exception such as the economic substance requirement is met. And for fiscal years beginning on or after 1 January 2025, Hong Kong applies a 15% global minimum tax and a Hong Kong minimum top-up tax to multinational groups with consolidated revenue of at least EUR 750 million.

The tax year, the returns and provisional tax

The year of assessment runs from 1 April to 31 March, so 2025/26 covered 1 April 2025 to 31 March 2026. A business that closes its accounts on another date is taxed on the accounting year that ends within the year of assessment.

Each tax has its own return, issued in a spring bulk run. For 2025/26 the IRD issued about 270,000 profits tax returns, 120,000 property tax returns and 340,000 employer's returns on 1 April 2026, with about 2.77 million tax returns for individuals following on 4 May. Returns are generally due within one month of issue; where a tax representative is appointed, later dates under the IRD's Block Extension Letter apply.

A new business generally receives its first profits tax return about 18 months after it starts or is incorporated, and our guide to company registration in Hong Kong sets that first return on a timeline with the other early deadlines.

Provisional tax explains why a first tax bill can look like two years at once. Because a year's profits or income are only known after it ends, the IRD charges provisional tax for the current year based on the previous one, and collects it alongside the final tax for the previous year, usually in two instalments. If income is likely to fall, you can apply in writing to hold over provisional tax on the grounds the law allows, such as profits likely to be less than 90% of the previous year's. The application has to arrive by 28 days before the due date or 14 days after the notice is issued, whichever is later.

What changed for 2025/26 and 2026/27

The main 2026-27 Budget tax measures are now law. The IRD's 2026-27 Budget page confirms that the tax reduction and the new allowances were passed on 13 May 2026 and gazetted on 22 May 2026.

• One-off reduction for 2025/26. Profits tax, salaries tax and tax under personal assessment are reduced by 100%, capped at HK$3,000 per case. The IRD applies it in the final assessment without any application. It does not reduce provisional tax, and it does not apply to property tax, though an eligible landlord can get it through personal assessment.
• Higher allowances from 2026/27. The basic allowance rises to HK$145,000, the married person's allowance to HK$290,000 and the child allowance to HK$140,000. The IRD applies the new amounts automatically when it calculates 2026/27 provisional salaries tax.
• A 6.5% stamp duty band for residential property above HK$100 million. The Stamp Duty (Amendment) Bill 2026 passed on 20 May 2026, backdated to documents signed on or after 26 February 2026.

Two further measures are proposals only. In the 2026 Policy Address on 16 September 2026, the Chief Executive proposed raising the child allowance to HK$160,000 for second and later children born on or after that date, and a stamp duty waiver of up to HK$20,000 for eligible families with a child born on or after that date who buy a home. Both need legislation, and the details may change before then.

When a tax advisor earns the fee

The IRD publishes the rates, the forms and its own interpretation notes, so the arithmetic is rarely the hard part. A tax advisor in Hong Kong earns the fee on judgment calls the forms assume you have already settled:

• Offshore profits claims. Whether profits arise outside Hong Kong is largely a question of fact, so a claim is only as strong as the records behind it.
• Cross-border employment. A job split between Hong Kong and another place, an overseas employer, or a double taxation question. Hong Kong has comprehensive double taxation agreements with a list of jurisdictions, including the Chinese Mainland.
• Property and investment gains. Whether a sale is a capital disposal or part of a trade decides whether profits tax applies at all.
• Groups. Connected entities sharing one lower tier, FSIE exceptions, and the global minimum tax for large multinational groups.
• Disagreeing with an assessment. An objection must reach the IRD in writing within one month after the date the notice of assessment is issued, so the time to bring someone in is as soon as the notice arrives.

For a company, accounting firms in Hong Kong handle the routine yearly cycle of bookkeeping, audit and profits tax return. A firm appointed as the company's tax representative files under the IRD's later block extension deadlines.

This guide is general information about Hong Kong tax, not tax, accounting or legal advice. Rates, allowances and deadlines change from year to year; for a specific situation, speak with a qualified tax advisor or accountant.