HK Salaries Tax

Hong Kong Salaries Tax -- Skill v1.0

Section 1 -- Quick Reference

Quick Reference

Quick Reference

Field	Value
Country / Territory	Hong Kong SAR, China
Tax	Salaries Tax (薪俸稅)
Currency	HKD (Hong Kong Dollar) only
Year of Assessment	1 April -- 31 March (2024/25 = 1 Apr 2024 -- 31 Mar 2025)
Primary legislation	Inland Revenue Ordinance (IRO), Cap. 112
Tax authority	Inland Revenue Department (IRD)
Filing portal	ird.gov.hk / eTAX (etax.ird.gov.hk)
Filing deadline	1 month from BIR60 issue (usually June/July); eTAX: 1 extra month
Validated by	Pending — requires sign-off by a Hong Kong CPA or tax representative
Skill version	1.0

Tax Calculation Method

• Salaries tax method — Salaries tax is the LOWER of: 1. Progressive rates on Net Chargeable Income (after deductions AND allowances) 2. Standard rate on Net Income (after deductions but BEFORE allowances)

Progressive Tax Rates (2024/25 onwards)

Progressive Tax Rates (2024/25 onwards)

Net Chargeable Income Band (HK$)	Rate	Tax in Band	Cumulative Tax
First 50,000	2%	1,000	1,000
Next 50,000	6%	3,000	4,000
Next 50,000	10%	5,000	9,000
Next 50,000	14%	7,000	16,000
Remainder	17%	—	—

Standard Rate (2024/25 onwards -- Two-Tiered)

Standard Rate (2024/25 onwards -- Two-Tiered)

Net Income (HK$)	Rate
First 5,000,000	15%
Exceeding 5,000,000	16%

Personal Allowances (2024/25)

Personal Allowances (2024/25)

Allowance	Amount (HK$)
Basic allowance	132,000
Married person's allowance	264,000
Child allowance (each child)	130,000
Child allowance -- year of birth (additional)	130,000
Dependent parent/grandparent (aged 60+)	50,000
Dependent parent/grandparent (aged 60+, living together)	100,000
Dependent parent/grandparent (aged 55--59)	25,000
Dependent parent/grandparent (aged 55--59, living together)	50,000
Dependent brother/sister allowance	37,500
Single parent allowance	132,000
Disabled dependant allowance	75,000
Personal disability allowance	75,000

Conservative Defaults

Conservative Defaults

Ambiguity	Default
Unknown marital status	Apply basic allowance (HK$132,000) only
Unknown whether children qualify	Do not claim child allowance
Unknown dependent parent arrangement	Do not claim additional allowance for living together
MPF deduction cap	Apply HK$18,000 cap per employee
Unknown whether progressive or standard rate lower	Calculate both; apply lower
Tax reduction year	Apply 2024/25 reduction: 100%, ceiling HK$1,500

2.1 Charge to Salaries Tax (IRO Sec. 8)

• Charge to salaries tax — Salaries tax is charged on every person in respect of income arising in or derived from Hong Kong from: Office or employment; Pension; Lump sum payments in connection with services rendered in Hong Kong (IRO Sec. 8)

2.2 Assessable Income

Assessable Income

Component	Treatment
Salary, wages, commission	Fully assessable
Bonus (discretionary or contractual)	Fully assessable
Leave pay, end-of-contract gratuity	Fully assessable (time-apportioned if partly HK service)
Housing benefit (provided by employer)	Add rental value: 10% of net income (4% if hotel, 8% if hostel)
Share options/awards	Assessable at exercise/vesting (gain = market value - cost)
Employer MPF contributions	NOT assessable (exempt under IRO Sec. 8(1A))
Reimbursed expenses (wholly business)	NOT assessable if solely for business
Education benefit for children	Assessable as perquisite
Severance / long service payment	Exempt up to statutory entitlement

2.3 Deductions (IRO Sec. 12)

Deductions (IRO Sec. 12) (IRO Sec. 12)

Deduction	Limit (2024/25)
Self-education expenses	HK$100,000
MPF mandatory contributions (employee)	HK$18,000
Approved charitable donations	35% of assessable income
Elderly residential care expenses	HK$100,000
Home loan interest	HK$100,000 (max 20 years of assessment)
Qualifying premiums (VHIS)	HK$8,000 per insured person
Qualifying annuity premiums (QDAP)	HK$60,000
MPF voluntary contributions (TVC)	HK$60,000
Domestic rent deduction	HK$100,000

• QDAP + TVC combined cap — QDAP + TVC deduction combined cap = HK$60,000. (IRO Sec. 12)

2.4 Rental Value of Quarters (IRO Sec. 9)

• Rental value of quarters — If employer provides housing: Rental value = 10% of net income (after other deductions) for a house/flat; 8% for a service occupancy (hostel); 4% for hotel/boarding house; If employer pays rent (not provides quarters): assessable as Place of Residence benefit, but capped at rent paid or 10% rental value, whichever lower (IRO Sec. 9)

3.1 Progressive Rate Calculation

• Progressive rate calculation worksheet — A. ASSESSABLE INCOME A1. Salary / wages / commission ___________ A2. Bonus / allowances ___________ A3. Rental value of quarters (10% of net) ___________ A4. Share option gains ___________ A5. Other perquisites ___________ A6. Total Assessable Income ___________ B. DEDUCTIONS (Section 12) B1. MPF mandatory contributions (max $18,000) ___________ B2. Self-education expenses (max $100,000) ___________ B3. Charitable donations (max 35% of A6) ___________ B4. Home loan interest (max $100,000) ___________ B5. QDAP + TVC (combined max $60,000) ___________ B6. VHIS premiums (max $8,000 per person) ___________ B7. Domestic rent (max $100,000) ___________ B8. Total Deductions ___________ C. NET INCOME (A6 - B8) ___________ [Used for standard rate calculation] D. ALLOWANCES D1. Basic / Married ___________ D2. Child allowances ___________ D3. Dependent parent/grandparent ___________ D4. Other allowances ___________ D5. Total Allowances ___________ E. NET CHARGEABLE INCOME (C - D5) ___________ [Used for progressive rate calculation] F. TAX COMPUTATION F1. Progressive tax on E ___________ F2. Standard rate tax on C (15% on first $5M, 16% excess) ___________ F3. Tax payable = LOWER of F1 and F2 ___________ G. TAX REDUCTION (2024/25) G1. 100% reduction, capped at $1,500 ___________ H. FINAL TAX (F3 - G1) ___________ I. PROVISIONAL TAX I1. Less: provisional tax already paid for 2024/25 ___________ I2. Plus: provisional tax for 2025/26 ___________ I3. NET AMOUNT PAYABLE ___________

3.2 Worked Example -- Single Employee

Worked Example -- Single Employee

Item	Amount (HK$)
Annual salary	600,000
Bonus	50,000
Total assessable income	650,000
Less: MPF mandatory (capped)	(18,000)
Net income	632,000
Less: Basic allowance	(132,000)
Net chargeable income	500,000

Progressive tax:

• First 50,000 × 2% = 1,000
• Next 50,000 × 6% = 3,000
• Next 50,000 × 10% = 5,000
• Next 50,000 × 14% = 7,000
• Remaining 300,000 × 17% = 51,000
• Total progressive = 67,000

Standard rate: 632,000 × 15% = 94,800

Tax payable = lower = HK$67,000 Less 2024/25 reduction (100%, max $1,500): HK$65,500

3.3 Worked Example -- Married with Children

Worked Example -- Married with Children

Item	Amount (HK$)
Annual salary	1,200,000
Total assessable income	1,200,000
Less: MPF mandatory (capped)	(18,000)
Net income	1,182,000
Less: Married allowance	(264,000)
Less: 2 children	(260,000)
Net chargeable income	658,000

Progressive tax:

• First 200,000 at bands = 16,000
• Remaining 458,000 × 17% = 77,860
• Total progressive = 93,860

Standard rate: 1,182,000 × 15% = 177,300

Tax payable = lower = HK$93,860 Less 2024/25 reduction: HK$92,360

4.1 BIR60 (Tax Return -- Individuals)

BIR60 (Tax Return -- Individuals)

Item	Detail
Form	BIR60 (個別人士報稅表)
Issue date	Usually first working day of May
Filing deadline (paper)	1 month from date of issue (usually early June)
Filing deadline (eTAX)	1 additional month (usually early July)
Extension	Automatic if filed via eTAX; further extension with tax representative
Singed by	Taxpayer (paper) or digital certificate/eTAX password (online)

4.2 Provisional Salaries Tax (IRO Sec. 63E)

Provisional Salaries Tax (IRO Sec. 63E) (IRO Sec. 63E)

Rule	Detail
Basis	Estimated at 100% of current year final tax
Payment	In two instalments (75% + 25%)
First instalment	Usually January
Second instalment	Usually April
Holdover	Can apply if income expected to drop >10% or allowances increase
Holdover deadline	28 days before first instalment due or 14 days before second

4.3 Objection and Appeal

Objection and Appeal

Step	Deadline
Objection to assessment	Within 1 month of Notice of Assessment
Form	Written notice to Assessor stating grounds
Appeal to Board of Review	Within 1 month of Commissioner's determination
Appeal to Court	Within 1 month of Board's determination

5.1 Non-Hong Kong Employment (Sec. 8(1A)(b))

• Non-Hong Kong employment — If employment is exercised partly outside Hong Kong: Income is time-apportioned (HK days / total days); Only HK-sourced portion is assessable; "60-day rule": visits totalling ≤60 days in a year = exempt (IRO Sec. 8(1A)(b))

5.2 Lump Sum Payments (Sec. 11D)

• Lump sum payments — Gratuity, severance: assessable if connected to HK employment; Retirement scheme lump sum: exempt if from recognised scheme and meets conditions; Golden handshake: fully assessable (IRO Sec. 11D)

5.3 Personal Assessment (IRO Sec. 41)

• Personal Assessment — Individuals may elect Personal Assessment to: Set off business losses against salaries income; Claim home loan interest deduction; Pool married couple's income for progressive rates. Requirements: Hong Kong permanent resident OR temporary resident for full year; Married couple must both elect if one does; May be beneficial when one spouse has losses/low income (IRO Sec. 41)

5.4 Joint Assessment vs Separate Taxation (Married Couples)

Joint Assessment vs Separate Taxation (Married Couples)

Method	When Beneficial
Joint assessment	One spouse has low/no income; unused allowances transfer
Separate taxation	Both spouses have high income; standard rate applies separately
Personal assessment (joint)	Business losses to offset; mortgage interest claim

5.5 Domestic Rent Deduction (from 2022/23)

Domestic Rent Deduction (from 2022/23)

Rule	Detail
Cap	HK$100,000 per year
Condition	Taxpayer not provided with quarters by employer
Condition	Property not owned by taxpayer or connected person
Condition	Tenancy agreement registered with Rating and Valuation Department
Married	Each spouse claims up to $100,000 if separate tenancies; or total $200,000 if joint assessment

5.6 Tax Reduction History (Recent Years)

Tax Reduction History (Recent Years)

Year of Assessment	Reduction	Ceiling
2022/23	100%	HK$6,000
2023/24	100%	HK$3,000
2024/25	100%	HK$1,500
2025/26 (proposed)	100%	HK$3,000

Section 6 -- Penalties and Surcharges

Penalties and Surcharges (IRO Sec. 80(2))

Offence	Penalty
Late filing without reasonable excuse	Up to HK$10,000 + 3× tax undercharged (IRO Sec. 80(2))
Failure to notify chargeability	Fine up to HK$10,000 + 3× tax undercharged
Incorrect return	Fine up to HK$10,000 + 3× tax undercharged; or on conviction HK$50,000 + imprisonment
Late payment surcharge	5% immediately on overdue amount; additional 10% after 6 months
Fraud or wilful evasion	Fine up to HK$50,000 + 3× tax + imprisonment up to 3 years

Section 7 -- Key Dates Calendar

Key Dates Calendar

Date	Event
1 April	Start of Year of Assessment
Early May	BIR60 issued by IRD
Early June	Filing deadline (paper)
Early July	Filing deadline (eTAX)
Oct--Nov	Notice of Assessment issued
January	First instalment of provisional tax due
31 March	End of Year of Assessment
April	Second instalment of provisional tax due

Section 8 -- Reference Material

Reference Material

Topic	Reference
Charge to salaries tax	IRO Sec. 8
Assessable income	IRO Sec. 9
Deductions	IRO Sec. 12, 12AA, 12B, 12BA, 16AA, 26I, 26J
Allowances	IRO Sec. 28--33
Progressive rates	IRO Schedule 2
Standard rate	IRO Sec. 12B / Schedule 2
Provisional tax	IRO Sec. 63--63J
Personal assessment	IRO Sec. 41--43
Domestic rent deduction	IRO Sec. 26J
Two-tiered standard rate	Inland Revenue (Amendment) (Taxation Proposals Relating to 2024-25 Budget) Ordinance
IRD official site	ird.gov.hk
eTAX portal	etax.ird.gov.hk
Salaries Tax computation guide	DIPN No. 9 (Rev. 2024)

Disclaimer

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