What if you could structure your global wealth in a jurisdiction that taxes only what happens within its borders, leaving your international income untouched? For high-net-worth individuals (HNWIs) and family offices navigating an increasingly complex global tax landscape, Hong Kong offers precisely this proposition. Beyond the headline-grabbing low rates, the city’s true power lies in a deliberate and strategic framework of territorial taxation and critical tax absences. This isn’t about evasion; it’s about efficient alignment for mobile, globally diversified wealth. Let’s examine the precise mechanisms that make Hong Kong a premier hub for wealth preservation and growth.

The Territorial Principle: Hong Kong’s Core Engine

Hong Kong operates on a strict territorial basis of taxation. Simply put, you are only taxed on profits or income that have a source in Hong Kong. This is the cornerstone of its appeal. Income from overseas investments, foreign business operations, or international capital gains typically falls outside the Hong Kong tax net, provided it is not remitted to a Hong Kong trade or business.

What Hong Kong Does NOT Tax: The Strategic Gaps

The absence of certain taxes creates powerful, asymmetric advantages for wealth management and investment:

Precision-Tuned Tax Rates for Individuals and Corporations

When income is taxable in Hong Kong, the rates remain highly competitive and structured for efficiency.

Salaries Tax: Progressive but Capped

Employment income is taxed on a progressive scale from 2% to 17%, but taxpayers can elect to be assessed at the standard rate, which is often lower for high earners. For the 2024/25 year, the standard rate is 15% on the first HK$5 million of net income and 16% on the remainder. Generous personal allowances (e.g., HK$132,000 basic, HK$130,000 per child) and deductions (e.g., MPF contributions, charitable donations, domestic rent) further reduce the taxable base.

Profits Tax: The Two-Tier Advantage

Hong Kong’s corporate tax is a two-tiered system designed to support businesses:

• Corporations: 8.25% on the first HK$2 million of assessable profits; 16.5% on the remainder.
• Unincorporated Businesses: 7.5% on the first HK$2 million; 15% on the remainder.

Only one entity within a group of connected companies can claim the lower tier, making strategic corporate structuring essential.

Navigating Modern Compliance and Global Changes

Hong Kong’s simplicity should not be mistaken for laxity. The system demands precision and has evolved to meet international standards.

The Evolving FSIE & Global Minimum Tax

Two major reforms are reshaping the landscape:

1. Foreign-Sourced Income Exemption (FSIE) Regime: Effective from 2023 (expanded in 2024), this requires multinational entities receiving foreign-sourced dividends, interest, intellectual property income, and disposal gains to meet an economic substance requirement in Hong Kong to claim tax exemption.
2. Global Minimum Tax (Pillar Two): Hong Kong enacted legislation in June 2025 (effective 1 Jan 2025) to implement the 15% global minimum tax for large multinational groups (revenue ≥ €750M). This includes a domestic Hong Kong Minimum Top-up Tax (HKMTT).

Stamp Duty: A Simplified Landscape

A significant pro-business move was the abolition of all additional ad valorem stamp duties on 28 February 2024. This means:

• Special Stamp Duty (SSD): Abolished.
• Buyer’s Stamp Duty (BSD): Abolished.
• New Residential Stamp Duty (NRSD): Abolished.

Only the basic Ad Valorem Stamp Duty (ranging from HK$100 to 4.25%) now applies to property transactions, significantly reducing acquisition costs for all buyers, including non-locals.

Hong Kong’s tax system remains a powerful, precision tool for global HNWIs. Its strength is not merely in low rates, but in a coherent philosophy of taxing only local-source income while eliminating taxes on capital and inheritance. While adapting to global transparency standards, it retains core advantages that are deeply embedded in its legal framework. For those with globally mobile wealth, understanding and strategically navigating this system offers a compelling blend of efficiency, stability, and access to Asian growth.