Hong Kong Salaries Tax,Tax Advisory - Conpak CPA Limited

Salaries Tax

Scope of Charge

Hong Kong salaries tax is charged on income arising in or derived from Hong Kong as per regional source.

Assessment Period

From 1 April of one year to 31 March of the next year

Rate of Taxation

Rate of Taxation Salaries tax is chargeable at progressive rates or standard rate, which will be the smaller of the following:
1) 15% of net total income chargeable at standard rate
2) Net chargeable income at salaries tax progressive rates

Widen the marginal tax bands for tax on salaries from the current HK$45,000 to HK$50,000, increase the number of tax bands from four to five, and adjust the marginal tax rates to 2%, 6%, 10%, 14% and 17% respectively commencing from 2018/19.

2019/20, 2018/19 2017/18
Tax Band(HK$) Tax Rate Tax Band(HK$) Tax Rate
First 50,000 2% First 45,000 2%
Next 50,000 6% Next 45,000 7%
Next 50,000 10% Next 45,000 12%
Next 50,000 14%
On the remainder 17% On the remainder 17%

Reduction

Reduce the tax on salaries and tax under personal assessment for 2018/19 by 100% subject to a ceiling of HK$20,000 (To be implemented after relevant legislation is passed).

Deductions and Allowances

Salaries tax clearly defines deductible items, that deductible portion includes donations from governmentally approved charitable organisations, contributions paid to recognized retirement schemes, self-education expenses, interest on personal home loans and all outgoing expenses incurred in order to fully or necessarily produce the assessable income. The information for tax allowances and tax rates for the year 2019/20 and 2018/19 is listed below:

Allowances in Computing Salaries Tax 2019/20(HK$) 2018/19(HK$)
Basic allowance 132,000 132,000
Married person's allowance 264,000 264,000
Child Allowance
1st to 9th child (each):
Year of birth 240,000 240,000
Other years 120,000 120,000
Dependent Parent / Grandparent Allowance
Aged 60 or above:
Not residing with taxpayer 50,000 50,000
Residing with taxpayer throughout the year 100,000 100,000
Aged 55 to 59:
Not residing with taxpayer 25,000 25,000
Residing with taxpayer throughout the year 50,000 50,000
Dependent Brother / Sister Allowance
(for whom no child allowance has been claimed by his / her parent)
37,500 37,500
Single Parent Allowance 132,000 132,000
Disabled Dependent Allowance
(in addition to any allowances already granted for the disabled person)
75,000 75,000
Introduce a personal disability allowance for eligible taxpayers 75,000 75,000
Maximum Deductions in Computing Salaries Tax 2019/20(HK$) 2018/19(HK$)
Charitable donation 35% of assessable income 35% of assessable income
Expenses of self-education 100,000 100,000
Home loan interest 100,000 100,000
Elderly residential care expense 100,000 100,000
Contribution to recognized occupational retirement scheme 18,000 18,000
Voluntary Contributions in Annuity Products and Mandatory Provident Fund 60,000
Qualifying Voluntary Health Insurance Scheme Policy Premiums 8,000 per insured person

Provisional Salaries Tax

Before the related tax year ends, the Inland Revenue Department (IRD) will impose the provisional salaries tax on persons according to the tax payment assessed in the previous year. In the succeeding year, when the tax payment for the related year is assessed, the provisional tax paid will be used to pay the salaries tax payable in that year.

Tax Relief

  • Provide a tax deduction of qualified premiums for taxpayers who purchase eligible health insurance products for themselves or their dependents under the Voluntary Health Insurance Scheme, at the ceiling of HK$8,000 per insured person.
  • Allow married persons the option to elect for personal assessment separately commencing from the year of assessment 2018/19, providing more flexibility to taxpayers.

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