Hong Kong is of course a magnet for international investment with among other things, its low and simple tax structures. This simplicity of taxation also extends to individuals, with personal tax rates starting as low as 2 percent, and capping out at 17%. Add to that no capital gains tax, no tax on overseas income, and no tax on dividends, you have a very straightforward and attractive tax system.
You Can Choose Your Tax Rate
Of course you can’t choose any tax rate, but Inland Revenue will allow you to choose to be taxed at the flat rate of 15 percent, or a progressive rate that goes up to 17 percent after your deductions, allowances, etc.
As a rule of thumb, if you are in a low to medium income bracket, you will be better off with the progressive rate that goes up to 17 percent. If you are a high earner however, you will probably want to go with the flat tax rate of 15 percent.
Deduct Your Mandatory Provident Fund (MPF) From Your Income
This one is both quick and easy and will save you a substantial sum of money. Assuming you are on the flat tax rate of 15 percent, you can deduct your MPF contributions from your income to a maximum of $14,500, which would result in savings of $2,175.
Have a Family
Having children can provide considerable tax relief for individuals in Hong Kong. In the first year after your child’s birth, you can claim $126,000, and $63,000 for each and every subsequent year.
While only one parent can claim this per family, you can make claims for up to nine children per family.
Read more about Hong Kong taxation on this Hong Kong Company Registration blog.
