Tax Category and Tax Rate in Hong Kong
Property Tax
Property tax is levied on rental income of the property invested by individuals. Property tax is a tax on owners of lands and/or buildings in Hong Kong. It is computed at the standard rate (15%) on the net assessable value of the property. The net assessable value is equal to the assessable value, i.e. rental income, less the statutory allowance for repairs and outgoings (20% of the assessable value). The deduction of the aforesaid 20% is calculated in a unified form, regardless of the actual expenditure. If a limited company owns any land or building for rental, it may be exempted from property tax and only profits tax shall be paid.
Stamp Duty
The stamp duty is computed at 0.225% of the transaction price for stock exchange (0.25% for the tax year of 1999/2000). For real estate selling, it is computed at 0.75% to 3.75% of the transaction price.
Estate Duty
The Government of Hong Kong levies estate duty on the assets situated in Hong Kong only. The estate duty shall be paid at 5% to 15% only when the total value of the assets exceeds HK$7,500,000.
Profits Tax:
Hong Kong levies profits tax based on territorial source at 16.5% of net profits.
Consumption Tax and Duty
In accordance with related provisions of Dutiable Commodities Ordinance, the Government of Hong Kong levies consumption taxes and duties on the following four types of commodities:
(I) Alcoholic Liquor
Alcoholic liquor means any liquid which contains more than 1.2% of ethyl alcohol by volume, including:
1. European-type liquor such as whisky, rum, brandy and beer, etc.;
2. Chinese-type liquor (non European-type liquor) such as rice wine;
3. industrial-type liquor, which means the liquor not intended for use as a beverage.
(II) Tobacco
Tobacco is mainly divided into two categories, manufactured tobacco and unmanufactured tobacco.
1. Manufactured tobacco includes cigarettes, cigars, snuff, hand-rolling tobacco, smoking tobacco, cigar cuttings, reconstituted tobacco and Chinese prepared tobacco (tobacco prepared in the traditional Chinese manner).
2. Unmanufactured tobacco means tobacco which has undergone no process of manufacture.
(III) Hydrocarbon Oil
Hydrocarbon oil means petroleum oil, coal tar, and oil produced from coal, shale, peat or any other bituminous substances, and all hydrocarbons that are in a liquid form at a temperature of 15 ℃ and under a pressure of 101 kPa, except any such hydrocarbons that are an ingredient in any goods that do not have the usual characteristic of hydrocarbon oil.
Hydrocarbon oil includes:
1. coal oil;
2. leaded petrol and unleaded petrol;
3. light diesel oil;
4. light oil;
5. vehicle and engine fuel.
(IV) Methyl Alcohol
Methyl alcohol mainly refers to industrial-type methyl alcohol.
Tax Exemption on Dutiable Commodities in Hong Kong
In accordance with the laws of Hong Kong, the following commodities have special permission for tax exemption:
(1) any spares, fuels and lubricants used in ships or tugboats with the registered net tonnage of more than 60 tons or aircrafts (including aircrafts used for test flight), not matter whether all of them are used outside Hong Kong or part of them are used in Hong Kong;
(2) any methyl alcohol that is used for aircraft engine or becomes undrinkable in fact;
(3) any commodities exported to overseas from Hong Kong;
(4) any commodities allowed to be destroyed and scraped upon the special permission granted by related departments of Hong Kong Government;
(5) any spirits used for educational, scientific and technological or charitable purpose upon the approval of the governor;
(6) any liquor used for Eucharist upon the certificate issued by the bishop;
(7) any articles used as samples or for promotion and advertising without commodity value and intention to resell;
(8) a few unsealed commodities stored in passengers’ luggage for personal use;
(9) any duty-paid commodities that were exported but turned to Hong Kong for some reason;
(10) private gifts sent to residents without commercial value and intention to sell;
(11) any commodities delivered to Hong Kong charities by non-residents.
Employer‘s Return
Submission of Employer‘s Return
The Inland Revenue Department (IRD) has sent the Employer‘s Return, which is to be filled out by the employer for his employees, for the year of 200X/200X to employers on XX XX, 200X. Employers have to complete and send it to the IRD within 1 month after it is sent. If you have not received the Employer‘s Return for current year, you have to contact the IRD for inquiry and the copy of Employer‘s Return.
A complete Employer‘s Return includes a copy of BIR56A and several copies of IR56B. You should read carefully the Notes and Instructions accompanying BIR56A. A "NIL" return of BIR56A is still required even if you have no employees or pensioners chargeable to Salaries Tax. To avoid duplication in reporting employee‘s income, no IR56B is required for those employees for whom an IR56F or IR56G has been submitted before.
Extension to submit annual Employer‘s Return
You must complete and sent it to the IRD within 1 month after it is sent. If you have difficulties in meeting the deadline, you may apply for an extension. Applications for extension should be made in writing and supported by reasonable grounds. In your application letter, please state the follow items:
(1) your company‘s name and file number;
(2) the year of assessment concerned;
(3) the time required for extension; and
(4) details of the reasons in support.
Submission of Employer‘s Return in computerized format
Employers can submit the Employer‘s Return filled out by the employers for each year in computerized format. Employers may develop their own software in accordance with the format provided by the IRD. For more details, please contact the Computer Section on 16/F, Revenue Tower, 5 Gloucester Road, Wan Chai, Hong Kong or at telephone number 2594 5111. Alternatively, you may use the IRD software which is provided free of charge to employers. Please click here to download the software from the IRD website.
Notes: What you have downloaded is a zipped file with decompression software. The zipped file contains program, Installation and Operation Guide and Quick Guide for Installation. After the file is downloaded, please click here to extract the file and read the Installation and Operation Guide and Quick Guide for Installation before installation.
How to obtain the copies of Employer‘s Return
Employers may contact the IRD for the copies of BIR56A (the Employer‘s Return filled out by the employer for his employee) or other forms (including IR56B, IR56E, IR56F, IR56M and IR56G, etc.) by phone or letter. In your letter, you must state your employer‘s file number, the company‘s name, the year of assessment concerned and your correspondence address.
