Hong Kong SAR Corporate – Other taxes

Updated on May 22, 2022

Value-added tax (VAT)

Taxes on goods and services are not collected in Hong Kong SAR.

Customs duties

Hong Kong SAR does not impose a duty on general imports.

Excise tax

Tobacco, liquor, methyl alcohol, and hydrocarbons are all subject to duties, regardless of whether they are imported or made in the United States.

Property tax

Land and buildings (excluding government and consular assets) in Hong Kong SAR are taxed annually at the standard rate of 15% on their net assessable value. For tax purposes, a property’s “net assessable value” is its market value minus any rates and notional allowances paid by the owner.

Profits tax is levied on rental revenue generated by a Hong Kong property owned by a corporation. The corporation that is taxed on its profits may seek an exemption from paying property taxes on the property in question. A company’s property tax can be used to offset its profits tax if no exemption is applied.

Stamp duty

Before 1 August 2021 or after 1 August 2021, stamp duty is payable on the sale and acquisition of Hong Kong stock at 0.2 percent of the consideration (or market value if it is higher) per transaction. A Hong Kong stock is one whose transfer is subject to registration with the Hong Kong Securities and Futures Commission.

In Hong Kong, stamp duty is based on the type of property being transferred (residential vs. non-residential) and the value of the property being sold. Stamp duty on the transfer of property currently follows the following formula:

Residential property transfers: 15% flat rate, with some exclusions. When a Hong Kong SAR permanent resident buys a single residential property and has no other Hong Kong SAR residential property at the time of purchase, this is an exemption (see 2 below).
When a Hong Kong resident who does not own any other Hong Kong SAR property at the time of acquisition acquires a single residential property, and under certain conditions: From HKD 100 (up to HKD 2 million) to 4.25 percent (up to HKD 2 million), Scale 2 rates are available (for property consideration exceeding HKD 20 million).
HKD 100 (for property worth up to HKD 2 million) to a Scale 2 rate of 4.25 percent is the scale 2 rate for non-residential property transfers (for property consideration exceeding HKD 20 million).
The amount of stamp duty due is determined by multiplying the purchase price of the property by the applicable tax rate (whichever is higher). In cases where Scale 2 rates are in effect, transfers of consideration that are just above the lower bound of each rate band are eligible for marginal relief.

In Hong Kong SAR, stamp duty is computed at a fixed percentage of the annual rental, which changes depending on the length of the lease. Today, rates can be as low as 0.25% and as high as 1.0% (for leases lasting no more than one year) (for lease period of more than three years).

Transfers of shares or immovable property between affiliated corporations, transfers of shares or ETF units listed in Hong Kong SAR, transfers of shares by ETF market makers during allotment and redemption of ETF units listed in Hong Kong, and certain stock borrowing and lending transactions are all eligible for exemption if certain conditions (if any) are met. Exemption is not available for any other transactions.

Special Stamp Duty (SSD)

If you sell your house within 36 months of the date you bought it, you’ll have to pay the SSD. With a few exceptions, SSD is imposed on top of stamp duty that is required for the conveyance on sale or agreement for the sale of residential properties. The resold property’s stated consideration or market value (whichever is greater) shall be used to determine the SSD due at the regressive rates below.

20% for residential homes that have been on the market for less than six months.
For properties kept for more than six months but less than a year, 15% of the value is taxed.
For properties owned for more than 12 months but less than 36 months, a ten percent tax is imposed.

Buyer’s Stamp Duty (BSD)

Hong Kong residents who purchase residential properties from non-Hong Kong residents are subject to a BSD. This includes Hong Kong and international companies. If the specified consideration or the market worth of the property purchased is more, the BSD is paid at a flat rate of 15%. With limited exceptions, the BSD is applied on top of the stamp duty and the SSD (where applicable).

Business registration fees

Within one month of starting a business in the Special Administrative Region of Hong Kong (HKSAR), everyone is needed to submit an application for business registration with a fee. There is a charge for renewing a business registration certificate every year or every three years, depending on the state. Banks and deposit-taking organisations must pay additional fees when applying for a registration or a licence.

Capital duty

Currently, Hong Kong SAR does not have a capital tax.

Government rates and rent

Rates are a form of indirect tax imposed on Hong Kong SAR property. Taxes are set at five per cent of yearly rateable value, calculated as of the specified valuation reference date of October 1, and based on the expected annual rental value.

It is common for privately owned land in Hong Kong SAR to be held by the Hong Kong SAR government under a government lease, which requires payment of rent in exchange for a right to hold and occupy land for a certain period of time. As of right now the rate of government rent is set at 3 percent of the property’s rateable value, and it is indexed to fluctuations in the rateable value over time.

Payroll taxes

Only the Mandatory Provident Fund (MPF) contribution is taxed in Hong Kong SAR (see below).

Mandatory Provident Fund (MPF) contribution

Employers are required to contribute 5 percent of an employee’s monthly salary to the Employee Retirement Income Security Act (ERISA). The highest monthly income eligible for contribution is HKD 30,000. In addition to the legally necessary payment, an employer may choose to make additional voluntary contributions.

Environmental taxes

Plastic Shopping Bag (PSB) Charging Scheme

The only exception to this rule is the use of plastic bags for food hygiene purposes, which are exempt from PSB costs. HK$0.50 per PSB must be charged to consumers by retail stores. The retailers keep the money they make from the PSB charges.