HOW TO CALCULATE SALARY TAX IN HONG KONG

ACCOUNTING & AUDITING

In order to attract global investment and expat genius to Hong Kong. Hong Kong not only offers an attractive tax regime for corporation and entrepreneurs.  Moreover, it also has a competitive low taxation scheme for personal income tax on Hong Kong Salary tax. Correspondingly, salaries Tax referred to Personal Income Tax as well.

Firstly, what is assessment year?

Hong Kong set a year of assessment runs from 1 April to 31 March of the following year. For example, 1 April 2020 to 31 March 2021 

Secondly, what is Provisional Salaries Tax?

Provisional Salaries Tax for a year is usually based on the income less the allowances of the preceding year. 

Thirdly, how to calculate your Salary Tax?

Personal Income can be assessed by Progressive Rate on your net chargeable income. Or at Standard Rate on your Net Income, whichever is lower.

Progressive Rate

Net Chargeable Income = Total Income – Deductions – Allowances

Standard Rate

Net Income = Total Income – Deductions

 

  1. Allowances Table:

Allowances

2020/21 Onwards
$

Basic Allowance

132,000

Married Person’s Allowance

264,000

Child Allowance (Each)

120,000

Dependent Brother or Sister (Each)

37,500

Dependent Parent & Grandparent Allowance (Each)  
Ø   Aged 60 or over

50,000

Ø   Aged 55 and below 60

25,000

Single Parent Allowance

132,000

Personal Disability Allowance

75,000

Disable Dependent Allowance (Each)

75,000

 

  1. Deductions Table:

Deductions

2020/21 Onwards
$

Expenses of Self-Education

100,000

Elderly Residential Care Expenses

100,000

Home Loan Interest

100,000

Mandatory Contributions to Recognized Retirement Schemes

18,000

Qualifying Premiums Paid under Voluntary Health Insurance Scheme (VHIS)

Policy (For each insured person)

8,000

Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions

60,000

Approved Charitable Donations

35%

 

  1. Calculation of Tax Payable:

 

Net Chargeable

Rate
On the First

$50,000

2%

On the Next

$50,000

6%

On the Next

$50,000

10%

On the Next

$50,000

14%

Remainder  

17%

Standard Rates of Tax  

15%

For further information, please contact us. 

You may want to read: HONG KONG PERSONAL TAX ALLOWANCE FOR 2020/2021

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