Hong Kong SAR

Individual - Foreign tax relief and tax treaties

Last reviewed - 31 December 2020

Foreign tax relief

As a relief from double taxation, unilateral income exemption is available for employment income derived from services rendered outside Hong Kong SAR and where tax similar to the nature of Hong Kong salaries tax has been charged and paid on that income in the territory in which the services are rendered. This is applicable up to the year of assessment 2017/18.

Starting from the year of assessment 2018/19, the income exemption claim is only available where foreign tax has been paid in a non-CDTA jurisdiction for services rendered in that jurisdiction.

Technically, this income exemption applies to both Hong Kong and non-Hong Kong employments. However, such exemption is practically not applicable to taxpayers with a non-Hong Kong employment as only income of services rendered in Hong Kong SAR is taxable in cases of non-Hong Kong employment.

A foreign tax credit is available to Hong Kong tax residents in respect of income derived from and taxable in a jurisdiction that has entered into a CDTA with Hong Kong SAR and the same income is subject to tax in Hong Kong SAR. Salaries taxpayers are required to take all reasonable steps to minimise the foreign tax payable before making a claim for tax credit in Hong Kong SAR.

Tax treaties

Currently, Hong Kong SAR has entered into 45 tax treaties with different jurisdictions as shown in the following table. All of the following treaties have been ratified and are effective unless indicated otherwise in the notes below.

Austria Indonesia New Zealand
Belarus Ireland Pakistan
Belgium Italy Portugal
Brunei Japan Qatar
Cambodia Jersey Romania
Canada Korea Russia
China, the People's Republic of Kuwait Saudi Arabia
Czech Republic Latvia Serbia (1)
Estonia Liechtenstein South Africa
Finland Luxembourg Spain
France Macau (1) Switzerland
Georgia (2) Malaysia Thailand
Guernsey Malta United Arab Emirates
Hungary Mexico United Kingdom
India The Netherlands Vietnam

Note

  1. The treaty will become effective from year of assessment 2021/22 in Hong Kong.
  2. Not yet ratified.

Hong Kong SAR has not entered into any social security agreements with any jurisdictions as there is no social security tax in Hong Kong SAR.

Estate and gift tax conventions

Hong Kong SAR has not entered into any estate and gift tax conventions because the estate duty was abolished in 2006 and it does not have a gift tax.

Tax information exchange agreements (TIEAs)

Currently, Hong Kong SAR has entered into seven TIEAs with different jurisdictions as shown in the following table.

Denmark Norway
Faroes Sweden
Greenland United States
Iceland

All of the above TIEAs are ratified and effective.

In addition to the signing of the Hong Kong SAR-United States TIEA in March 2014, Hong Kong SAR signed a Model 2 intergovernmental agreement (IGA) with the United States in November 2014 to facilitate financial institutions in Hong Kong SAR to comply with the Foreign Account Tax Compliance Act (FATCA).

Automatic exchange of information (AEOI)/Common Reporting Standard (CRS) regime

Hong Kong SAR has put in place a legislative framework to implement the AEOI/CRS regime. Reportable financial institutions are required to identify the reportable financial accounts held by (i) tax residents of reportable jurisdictions or (ii) passive non-financial entities whose controlling persons are tax residents of reportable jurisdictions in accordance with the specified due diligence procedures, collect the required information of those reportable accounts, and furnish such information to the HKIRD. Such information will then be exchanged on an annual basis.

There are 126 reportable jurisdictions effective from 1 January 2020. However, Hong Kong SAR will only conduct AEOI with a reportable jurisdiction when an agreement is in place with that reportable jurisdiction to provide the basis for exchange.

As of December 2020, Hong Kong SAR has activated exchange relationships for CRS purposes with 65 jurisdictions based on either a bilateral or multilateral competent authority agreement for CRS.