Hong Kong Restaurant & F&B Tax — Specialist Advisory

Yes, food provided to staff as part of their employment conditions is generally a deductible business expense. However, the value of meals provided may also need to be reported as a taxable benefit to employees on IR56B, depending on the arrangement and whether the meals are provided at cost.

Franchise royalties paid to a licensor are generally deductible as a business expense under s.16(1) of the IRO, provided they are incurred in the production of assessable profits. If paid to a non-resident, withholding tax considerations may arise under s.20B. Proper documentation of the franchise agreement is essential.

Restaurants can claim: (1) Initial and annual allowances on plant & machinery (kitchen equipment, POS systems, refrigerators) — typically 60% initial + 10-30% annual on reducing balance; (2) S.16C renovation allowances at 20% per year over 5 years for structural renovation costs; (3) Commercial building allowances at 4% per year on the building shell if owned.

Yes. Commissions paid to Foodpanda, Deliveroo, OpenRice, and similar platforms are deductible trade expenses. The correct approach is to report gross delivery revenue as income and deduct the commission as an expense, rather than netting off. This ensures accurate profit calculation and avoids understating turnover.

For a company, the first HKD 2 million of assessable profits is taxed at 8.25% (half the standard 16.5% rate), with the remainder at 16.5%. For unincorporated businesses (sole proprietors/partnerships), it's 7.5% on the first HKD 2M, then 15%. This can save up to HKD 165,000 per year for qualifying restaurants.

No. Hong Kong has no GST, VAT, or sales tax. Restaurant bills are not subject to any consumption tax. This is a significant competitive advantage for HK F&B operators compared to neighbouring jurisdictions.