Hong Kong SAR
Value-added tax (VAT)
Hong Kong SAR does not have a VAT, goods and services tax, or sales tax.
There is no tariff on general imports in Hong Kong SAR.
Duties are levied on limited categories of dutiable commodities (i.e. tobacco, liquor, methyl alcohol, and hydrocarbons), regardless of whether they are imported or locally manufactured.
Property tax is charged annually to the owner of any land or buildings (except government and consular properties) in Hong Kong SAR at the standard rate of 15% on the net assessable value of such land or buildings. Net assessable value of a property is the consideration payable to the owner for the right to use the land or buildings less rates paid by the owner and a 20% notional allowance.
Rental income derived by a corporation from a Hong Kong property is subject to profits tax. The corporation that is subject to profits tax may apply for an exemption from property tax in respect of the property. If no exemption is applied, the property tax paid can be used to offset against the profits tax payable by the corporation.
Stamp duty is charged on transfer of Hong Kong stock by way of sale and purchase at 0.2% of the consideration (or the market value if it is higher) per transaction. Hong Kong stock is defined as stock the transfer of which must be registered in Hong Kong SAR.
Effective from 11 am on 28 February 2024, ad valorem stamp duty on transfer of properties is charged at progressive rates ranging from HKD 100 (for property consideration of up to HKD 3 million) to 4.25% (for property consideration exceeding HKD 20 million).
The stamp duty payable is computed by applying the relevant rate to the consideration or market value of the property (whichever is higher). Marginal relief is available for transfer where the consideration is marginally above the lower bound of each rate band.
For lease of immovable property in Hong Kong SAR, stamp duty is calculated at a specified rate of the annual rental that varies with the term of the lease. Currently, the applicable rate ranges from 0.25% (for lease period of not more than one year) to 1% (for lease period of more than three years).
Exemption is available for certain transactions, such as transfer of shares or immovable property between associated bodies corporate, transfer of shares or units of exchange traded funds (ETFs) listed in Hong Kong SAR, transfer of shares by ETF market makers in the course of allotting and redeeming ETF units listed in Hong Kong SAR, transfer of shares relating to dual-counter stock made by dual-counter market markers, and certain stock borrowing and lending transactions, provided that the specified conditions for exemption (if any) are satisfied.
Special stamp duty (SSD)
There is an SSD on resale of residential property within 24 months from the date of acquisition. Effective from 11 am on 28 February 2024, the rate of SSD payable is reduced to 0%.
Buyer’s stamp duty (BSD)
A BSD is payable on acquisition of Hong Kong residential properties by any person (including Hong Kong and foreign companies) other than a Hong Kong permanent resident. Effective from 11 am on 28 February 2024, the rate of BSD payable is reduced to 0%.
Business registration fees
Every person who carries on a business in Hong Kong SAR is required to apply for business registration with a fee within one month from the date of commencement of the business. The business registration certificate has to be renewed either on an annual basis or every three years with a payment of a business registration (renewal) fee. Special registration and licence fees are applicable to banks and deposit-taking companies.
There is currently no capital duty in Hong Kong SAR.
Government rates and rent
Rates are an indirect tax levied on properties in Hong Kong SAR. Rates are charged at 5% of the rateable value, which is the estimated annual rental value of a property at the designated valuation reference date of 1 October.
Privately owned land in Hong Kong SAR is normally held by way of a government lease under which rent is payable to the Hong Kong SAR government in return for the right to hold and occupy the land for the term (i.e. the duration) specified in the lease document. Currently, government rent is calculated at 3% of the rateable value of the property and is adjusted in step with any subsequent changes in the rateable value.
In Hong Kong SAR, there are no payroll taxes other than the Mandatory Provident Fund (MPF) contribution (see below).
Mandatory Provident Fund (MPF) contribution
Under the MPF scheme, an employer is required to make a mandatory contribution for an employee in the amount equal to 5% of the monthly income of that employee. The maximum level of income for contribution purposes is HKD 30,000 per month. An employer may make voluntary contributions in addition to the mandatory contribution required.
Plastic shopping bag (PSB) charging scheme
Except for plastics bags used for food hygiene reasons, all plastic bags (including flat-top bags) used for retail sales are subject to PSB charges. Retailers are required to charge at least HKD 1 for each PSB provided to consumers. The proceeds from the PSB charges are retained by the retailers.
Municipal solid waste (MSW) charging
The Hong Kong SAR government will implement MSW charging on 1 August 2024. In line with the ‘polluter-pays’ principle, the waste disposed of by all sectors in Hong Kong SAR will be subject to charging based on its quantity.