Whilst we are by no means expert in the Hong Kong taxation system, here’s a broad overview for a taxpayer holding a Hong Kong resident visa under the NCIES:

Income Tax

Salaries Tax: In Hong Kong, individuals are taxed on a territorial basis, meaning only income sourced within Hong Kong is subject to tax.

Income from abroad is not taxed. Salaries tax rates are progressive, up to 17%, but do not apply to foreign income.

Profits Tax

The corporate profits tax rate in Hong Kong is 16.5% for corporations and 15% for unincorporated businesses.

However, Hong Kong has introduced a two-tiered profits tax rate system to support small and medium enterprises (SMEs).

Under this system, the first HKD2 million of profits earned by businesses is taxed at a lower rate of 8.25% for corporations and 7.5% for unincorporated businesses.

Profits above HKD2 million continue to be taxed at the standard rates of 16.5% and 15%, respectively.

Investment Gains

Capital Gains: There is no capital gains tax in Hong Kong, allowing for taxfree capital appreciation on investments such as shares, bonds, and real estate (if not used for personal residence).

Dividends and Interest: Dividend income from investments and interest income are not taxed in Hong Kong, enhancing the attractiveness of investment income.

Real Estate Investments

Rental Income: Rental income from properties in Hong Kong is subject to property tax, charged at a standard rate of 15% on the net assessable value, which is calculated after deducting allowable expenses.

Stamp Duty: Following the update on 28 February 2024, all buyers of real properties are subject to ad valorem stamp duty, with rates ranging from HK$100 up to 4.25% of the higher of the property’s market value or consideration. This revised rate structure applies equally to Permanent and NonPermanent Hong Kong residents, potentially lowering the entry barrier for real estate investment under the NCIES visa.

Property Tax: Property owners are liable for a property tax, levied at 15% of the net assessable value of the property, factoring in rent minus allowable deductions.

Estate and Inheritance Taxes

Estate Duty: There is no inheritance tax in Hong Kong, as estate duty was abolished in 2006.

Double Taxation Agreements (DTAs)

Avoiding Double Taxation: Hong Kong has DTAs with numerous countries to prevent double taxation. Given its territorial tax system, income taxed abroad is not subject to Hong Kong taxes, which mitigates the risk of double taxation even without the application of DTAs.

Tax Residency & Global Income

Having a NCIES visa and being a tax resident does not make your global income subject to Hong Kong taxes due to the territory’s territorial taxation policy.

Only Hong Kong sourced income is taxable.

In light of the stamp duty changes effective from 28 February 2024, investing in Hong Kong under the NCIES program becomes potentially more appealing, especially for those interested in real estate, due to the more favorable stamp duty rates for both Permanent and NonPermanent residents.

These changes, coupled with the absence of capital gains tax and tax on dividends and interest, underscore the tax efficiency of investing in Hong Kong.

However, navigating the specifics of stamp duty and property tax requires careful planning.