Are you a non-resident director of a Hong Kong company wondering how to navigate tax compliance from abroad? With Hong Kong’s sophisticated eTAX portal, managing your tax obligations has never been more streamlined. This comprehensive guide walks you through everything you need to know about fulfilling your Hong Kong tax duties as a non-resident director in 2024-2025, leveraging the power of digital tax administration.

Understanding Non-Resident Director Status in Hong Kong

What Defines a Non-Resident Director?

Tax residency in Hong Kong isn’t just about where you live—it’s determined by specific tests that assess your connection to the territory. The Inland Revenue Department (IRD) applies clear criteria to determine whether you’re considered a resident or non-resident for tax purposes.

You’re generally considered a Hong Kong tax resident if you meet any of these conditions:

• Ordinary Residence Test: Your habitual place of residence is Hong Kong
• 180-Day Rule: You stay in Hong Kong for more than 180 days during the tax year (April 1 to March 31)
• 300-Day Rule: You stay in Hong Kong for more than 300 days over two consecutive tax years, including the relevant year

If you don’t meet any of these tests, you’re considered a non-resident. However, this doesn’t automatically exempt you from Hong Kong tax on Hong Kong-sourced income—especially director’s fees.

The Territorial Basis of Taxation

Hong Kong operates on a territorial tax system, meaning all individuals—residents and non-residents alike—are subject to Hong Kong salaries tax on:

1. Hong Kong-sourced employment income
2. Income from an office held in Hong Kong (including directorship fees)
3. Income from a Hong Kong pension

The 60-Day Exemption Rule

There’s a limited exemption available: if you stay in Hong Kong for 60 days or less during the tax year AND all services are rendered outside Hong Kong, you may qualify for exemption. However, this rarely applies to directors because holding a directorship of a Hong Kong company is considered an office held in Hong Kong, making the income chargeable regardless of where duties are performed.

The eTAX Portal: Your Digital Gateway to Compliance

Overview of eTAX Services for Non-Residents

The IRD’s eTAX portal has undergone significant upgrades, making it exceptionally user-friendly for non-resident filers. Here’s what the system offers:

• 24/7 Global Access: File returns from anywhere in the world
• Automatic Extension: E-filing grants an automatic one-month extension (July 2 instead of June 2 for individual returns)
• Real-Time Tax Calculation: System automatically computes your tax liability
• Secure Transmission: Encrypted communications protect sensitive data
• Instant Confirmation: Immediate acknowledgment of return submission
• Document Upload: Submit supporting documents (PDF/JPG format) electronically
• Payment Integration: Pay taxes online through various payment methods
• Status Tracking: Monitor progress of returns and correspondence

Accessing the Individual Tax Portal

Non-resident directors primarily use the Individual Tax Portal at https://itp.etax.ird.gov.hk for filing salaries tax returns (Form BIR60). To access the portal, you’ll need:

• Your Tax File Number
• Hong Kong Identity Card number or Passport number
• A valid email address for notifications
• Your unique login credentials (obtained through initial registration)

Tax Obligations for Non-Resident Directors

Individual Tax Return (BIR60)

The BIR60 is issued to individual taxpayers to report salaries, rental income from solely owned properties, and profits from sole-proprietorship businesses. For non-resident directors, the primary focus is reporting director’s remuneration.

Employer’s Return Requirements (IR56B)

While directors file individual tax returns (BIR60), Hong Kong companies employing non-resident directors must comply with employer reporting obligations through the Employer’s Return (Form BIR56A and IR56 series).

Key updates affecting non-resident directors:

• Electronic Filing Mandatory: All IR56B submissions must be through online e-filing
• Increased Capacity: The IR56 e-filing tool expanded from 800 to 2,000 records per file, with up to 5,000 records per submission
• Director Reporting Threshold: Directors must be included on IR56B regardless of amount paid if they’re likely to have other chargeable income
• Filing Deadline: Within one month from BIR56A issuance (typically around April 1)

This means Hong Kong companies must report all non-resident directors’ remuneration—including fees, salaries, bonuses, benefits-in-kind, and other compensation—regardless of where payment is made or received.

Understanding Hong Kong Tax Rates for 2024/25

Salaries Tax Calculation Methods

Hong Kong offers two methods for calculating salaries tax, and the IRD automatically applies whichever results in lower tax liability:

Method 1: Progressive Rates

Method 2: Standard Rate

Under the two-tiered standard rate system for 2024/25:

• First HK$5,000,000 of net assessable income: 15%
• Net assessable income exceeding HK$5,000,000: 16%

The net chargeable income is calculated as total income minus allowable deductions and personal allowances. The net assessable income is total income minus allowable deductions only (no personal allowances deducted).

Available Allowances and Deductions

Non-resident directors may claim certain allowances and deductions to reduce tax liability:

Profits Tax Rates (For Director-Shareholders)

Directors who also receive profits distributions from their Hong Kong companies should be aware of the two-tiered profits tax system:

Notably, Hong Kong does not impose capital gains tax, dividend tax, or withholding tax on interest income, making it an attractive jurisdiction for business operations.

Step-by-Step Guide to eTAX Filing for Non-Resident Directors

Preparing for Your eTAX Submission

Before logging into the eTAX portal, gather these essential documents:

1. Identity Documents: Hong Kong ID card or passport details
2. Income Records: Details of all director’s fees, salaries, bonuses, and benefits received
3. IR56B Form: Copy of the IR56B issued by your Hong Kong company employer
4. Deduction Evidence: MPF contribution statements, self-education expense receipts, charitable donation receipts
5. Dependent Information: Details of spouse, children, and dependent parents if claiming allowances
6. Bank Account Information: For tax refunds or payment arrangements
7. Prior Year Returns: Previous tax returns for reference

Filing Process Through the Individual Tax Portal

1. Step 1: Access and Login
   Navigate to https://itp.etax.ird.gov.hk, enter your login credentials, and verify your identity through two-factor authentication if enabled.
2. Step 2: Select the Appropriate Tax Return
   Choose the BIR60 form for the relevant tax year (e.g., 2024/25) and confirm your personal particulars are correct.
3. Step 3: Report Your Income
   Enter employment income details in Part 4 of the return, report director’s fees separately from salaries if applicable, and include all benefits-in-kind.
4. Step 4: Claim Allowances and Deductions
   Select applicable personal allowances, enter deductible expenses, and upload supporting documents in PDF or JPG format.
5. Step 5: Review Automatic Tax Calculation
   The system automatically computes your tax liability—review both progressive rate and standard rate calculations.
6. Step 6: Submit and Confirm
   Review all information for accuracy, submit the return electronically, and save the submission acknowledgment receipt with reference number.
7. Step 7: Payment (if tax is payable)
   Wait for the Notice of Assessment from IRD (typically 3-6 months after filing) and pay by the due date shown, usually in two installments.

Double Taxation Relief and Tax Planning

Understanding Double Taxation Agreements (DTAs)

As a non-resident director, you may face tax in both your country of residence and Hong Kong on the same income. Hong Kong has comprehensive double taxation agreements with over 45 jurisdictions, providing relief through:

• Tax Credits: Offset Hong Kong tax paid against tax liability in your home country
• Exemption Method: Exempt certain income from tax in one jurisdiction
• Reduced Rates: Lower withholding tax rates on certain income types
• Tiebreaker Rules: Clarify tax residency when you qualify as resident in both jurisdictions

To claim DTA benefits, you typically need a Certificate of Residence from your home country’s tax authority and must submit it to the IRD along with relevant claim forms.

Tax Planning Strategies for Non-Resident Directors

Legitimate tax planning can minimize your overall tax burden while maintaining compliance:

1. Structure Remuneration Efficiently: Consider the mix of director’s fees, salaries, and dividends based on tax implications in both jurisdictions
2. Timing of Income: Be strategic about when income is paid to optimize allowances and deductions across tax years
3. Maximize Deductions: Ensure you claim all eligible deductions including MPF contributions and qualifying expenses
4. Leverage DTAs: Understand and utilize available treaty benefits to avoid double taxation
5. Document Everything: Maintain comprehensive records to support your tax position and DTA claims
6. Regular Compliance Reviews: Periodically review your tax structure with professionals

Compliance Requirements and Record Keeping

Mandatory Record Retention

The IRD requires taxpayers to maintain proper records for a minimum of 7 years. Non-resident directors must retain:

• All tax returns and supporting schedules
• Notices of assessment and demand notes
• Payment receipts and bank statements showing tax payments
• Employment contracts and directorship agreements
• Records of all remuneration received (payslips, bank credits, fee invoices)
• IR56B forms received from employers
• Evidence of deductible expenses (MPF statements, receipts)
• Documentation supporting allowance claims
• Correspondence with the IRD
• Certificates of residence for DTA claims
• Travel records if claiming days in/out of Hong Kong

Penalties for Non-Compliance