📋 Key Highlights
- Filing Deadline: Within approximately 1 month of receiving the BIR60 tax return (usually early June)
- Standard Rate (from 2024/25): 15% on the first HK$5 million of net income; 16% on the remainder
- Basic Allowance (2024/25): HK$132,000 for single individuals
- MPF Mandatory Contributions Deduction: Annual cap of HK$18,000
- Electronic Filing: Can be submitted online via the "eTAX" platform
Note: The current year of assessment is 2026/27 (1 April 2026 to 31 March 2027). The tax rates and allowances below are the most recently published figures for the 2024/25 year—unless adjusted in the latest Budget, they generally remain applicable, but please verify the latest amounts on the Inland Revenue Department website before filing.
Received the green tax return from the Hong Kong Inland Revenue Department (IRD) for the first time and not sure where to start? Don't worry—Hong Kong's tax system is renowned for its simplicity and clarity. Whether you are a professional newly arrived in Hong Kong, a fresh graduate entering the workforce, or filing taxes for the first time, this step-by-step guide will help you easily understand your tax obligations, master form-filling techniques, and get prepared for the coming year.
Understanding Your Tax Obligations
Hong Kong adopts a "territorial source" principle of taxation, meaning taxes are levied only on income arising in or derived from Hong Kong. If you receive a "Tax Return - Individuals" (Form BIR60) issued by the IRD, you must complete and submit it within the statutory time limit, even if you believe you have no tax liability. Hong Kong's year of assessment runs from 1 April to 31 March of the following year, and tax returns are typically issued in early May.
What Income Is Taxable?
Clearly distinguishing between taxable and non-taxable income is the first step to accurate tax filing. Hong Kong primarily levies tax on employment income, rental income from local properties, and similar sources, but several common types of income are explicitly tax-exempt.
| Income Category | Tax Status | Applicable Tax |
|---|---|---|
| Salary from employment in Hong Kong | Taxable | Salaries Tax |
| Rental income from Hong Kong properties | Taxable | Property Tax |
| Director's fees (services rendered in Hong Kong) | Taxable | Salaries Tax |
| Pensions derived from Hong Kong employment | Taxable | Salaries Tax |
| Severance payment (under the Employment Ordinance) | Tax-exempt | Not applicable |
| Interest income | Tax-exempt | Not applicable |
| Capital gains (e.g., profits from stock trading) | Tax-exempt | Not applicable |
| Dividends | Tax-exempt | Not applicable |
Documents You Must Prepare Before Tax Filing
Adequate preparation is the key to smooth tax filing. Before starting to fill out the form, please organize the following documents to ensure the information is accurate.
| Document Category | Purpose |
|---|---|
| Employer's Return of Remuneration and Pensions (Form IR56B) | Verify employment income and mandatory MPF contributions |
| MPF Contribution Statement | Confirm mandatory MPF contributions (annual cap of HK$18,000) |
| Tenancy agreements and rent receipts | Report rental income from Hong Kong properties |
| Receipts for various deductible expenses | Substantiate expenses for eligible tax-deductible items |
| Approved charitable donation receipts | Support claims for donation deductions (capped at 35% of assessable income) |
| Home loan interest statements | Claim home loan interest deductions (annual cap of HK$100,000) |
Choosing the Right Tax Return Form: BIR60 vs. BIR57
Selecting the correct form is the first step in filing your tax return. For most employees, BIR60 is the appropriate choice; however, if you are a sole proprietor, you will need to use Form BIR57.
| Form Type | Primary Purpose | Taxpayer Category |
|---|---|---|
| BIR60 (Tax Return - Individuals) | Report salaries, property rental income, and pensions | Employees, retirees, property owners |
| BIR57 (Profits Tax Return) | Report profits/losses of sole proprietorship businesses | Individuals operating businesses as sole proprietorships |
Please be sure to download the latest version of the forms from the Inland Revenue Department (IRD) website. The IRD usually issues tax returns in early May, and the submission deadline is generally about 1 month from the date of issue (around early June).
Understanding the Calculation Methods for Hong Kong Salaries Tax
Hong Kong uses two methods to calculate Salaries Tax, and the IRD will charge you the lower amount resulting from the two calculations. Understanding these two methods will help you estimate your tax liability.
Method 1: Progressive Tax Rates
Progressive tax rates apply to your "Net Chargeable Income" (i.e., income after deducting allowances and allowable deductions). The tax rates increase progressively across income brackets:
| Net Chargeable Income (HKD) | Tax Rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder | 17% |
Method 2: Standard Rate (Two-tier system starting from 2024/25)
The standard rate applies to your "Net Income" (i.e., income before deducting personal allowances). Starting from the 2024/25 year of assessment, Hong Kong adopts a two-tiered standard rate regime:
- First HK$5,000,000 of net income: Tax rate is 15%
- Portion exceeding HK$5,000,000: Tax rate is 16%
Making Good Use of Personal Allowances (2024/25 Year of Assessment)
Personal allowances directly reduce your net chargeable income. Below are the major allowances for the 2024/25 year of assessment:
- Basic Allowance: HK$132,000 (applied automatically)
- Married Person's Allowance: HK$264,000 (applicable to couples where the spouse has no income or who elect for joint assessment)
- Child Allowance: HK$130,000 per child
- Additional Child Allowance (Year of Birth): HK$130,000
- Dependent Parent/Grandparent Allowance (aged 60 or above): HK$50,000
- Single Parent Allowance: HK$132,000
Common First-Time Tax Filing Mistakes and How to Avoid Them
Understanding common mistakes can save you time and prevent unnecessary misunderstandings with the Inland Revenue Department (IRD). Below are the most frequent errors made by first-time tax filers:
- Incorrectly Claiming Married Person's Allowance: Ensure that you were legally married throughout the year of assessment and not separated. Your spouse's income affects your eligibility to claim.
- Overlooking Eligibility Criteria for Dependent Parents: Claiming the Dependent Parent/Grandparent Allowance requires the dependent to be aged 60 or above (or eligible for the disability allowance), ordinarily resident in Hong Kong, and maintained by you.
- Misunderstanding Provisional Tax: Provisional tax is an estimated tax calculated based on your previous year's income. Your actual final tax payable may differ, resulting in a tax balance to be settled or a tax refund.
- Losing Deduction Receipts: Be sure to properly retain receipts for charitable donations, self-education expenses (capped at HK$100,000), home loan interest (capped at HK$100,000), and other tax-deductible items.
- Missing the Tax Filing Deadline: The submission deadline is usually within 1 month from the date of issue of the BIR60 form. Late filing may result in penalties.
Electronic Tax Filing via the "eTAX" Platform
The IRD's "eTAX" platform is the most convenient way to file your taxes. Follow these steps to use it:
- Open an Account: Register for a government "eTAX" account well before the deadline to avoid last-minute issues.
- Prepare Digital Signing: You will need a digital certificate issued by a recognized certification authority to authenticate your electronic tax return.
- Complete and Submit: Fill out the form online or upload a prepared file, verify the information carefully, sign it digitally, and submit.
- Retain Confirmation: Keep the submission acknowledgement receipt as proof of on-time filing.
How to Handle a Notice of Assessment
After submitting your tax return, you will receive a "Notice of Assessment" issued by the Inland Revenue Department. You should:
| Action | Timing / Deadline |
|---|---|
| Receive Notice of Assessment | A few weeks to a few months after the tax return filing deadline |
| Check for discrepancies | Immediately upon receipt |
| Lodge a written objection (if necessary) | Within 1 month from the date of issue of the notice |
| Pay undisputed tax | Pay on or before the due date specified on the notice |
If you disagree with the assessment, you must lodge a written objection within one month, stating your grounds and providing supporting documents. Even if an objection is being lodged, you must still pay any undisputed tax on or before the due date.
Planning Ahead for Future Years of Assessment
Successfully completing your first tax filing is a milestone, but proactive planning will make future tax filings much easier:
- Establish systematic record-keeping habits: Set up a system (digital or physical) to store tax documents throughout the year.
- Consider purchasing Tax Reserve Certificates: The Inland Revenue Department's Tax Reserve Certificates scheme allows you to save in installments to pay future tax liabilities, easing your financial burden.
- Conduct mid-year reviews: Assess changes in income, expenses, or personal circumstances (such as getting married, having children, or changing jobs), which may affect your tax position.
- Stay updated: Tax rules may change. Bookmark the Inland Revenue Department website to obtain the latest information on tax rates, allowances, and filing procedures.
✅ Key Summary
- Hong Kong adopts a territorial source principle of taxation, taxing only income derived from or arising in Hong Kong.
- Use Form BIR60 to report employment or rental income; use Form BIR57 to report sole proprietorship business profits.
- Make full use of tax allowances and deductions to lower your assessable income.
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