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Residency Status and Salaries Tax on Hong Kong-Sourced Employment Income

Updated: Jun 4

Income received by employee earned from working outside Hong Kong

Here's how income tax applies to an employee in Hong Kong who receives income earned outside Hong Kong:

Exemption for Non-Hong Kong Employment:

Hong Kong offers tax relief to avoid double taxation.  If your employment is considered non-Hong Kong based, income from a non-Hong Kong employment is exempt from Hong Kong salaries tax if all three conditions are met:

  • The employment contract is negotiated, entered into, and enforceable outside Hong Kong.

  • The employer is a resident of a place outside Hong Kong.

  • The employee's remuneration (salary) is paid outside Hong Kong.

Exemption for Short Visits to Hong Kong:

  • Even for a Hong Kong-based employment, income is exempt if all services are rendered outside Hong Kong in a tax year.

  • There's a 60-day rule: Days spent working in Hong Kong for less than 60 days in a year are disregarded.

Taxation on Income Earned in Hong Kong:

However, there are situations where even for non-Hong Kong employment, a portion of your salary might be taxable in Hong Kong. This happens if you perform any services in Hong Kong during the tax year.

  • If any services are rendered in Hong Kong, only the income attributable to those days is subject to salaries tax.

  • Time Apportionment: In such cases, only the income attributable to the days you worked in Hong Kong is subject to tax. This is calculated based on a time apportionment basis.

How Hong Kong's salaries tax system applies to non-Resident employees:

  • Territorial Source Basis: Hong Kong taxes income arising in or derived from Hong Kong, regardless of residency.

  • Non-Resident Employment Exemption: Income from a genuinely non-Hong Kong employment is generally exempt.

  • Taxation for Work Performed in Hong Kong: Even for non-resident employment, income earned for services rendered in Hong Kong might be taxable.

This information is valuable for anyone who is a non-resident employee working in Hong Kong or considering such work.

If you are an employee and your source of employment is in Hong Kong, your full income is chargeable to salaries tax even if some of your duties are performed outside of Hong Kong.

That's an important aspect of Hong Kong's salaries tax system.

Here's a breakdown of how it works:

  • Hong Kong Source of Employment:  If your employer is based in Hong Kong and your employment contract is established there, then your entire income is subject to salaries tax, regardless of where you perform your duties.

  • Location of Work: Even if you work remotely from outside Hong Kong sometimes, it doesn't exempt your income from tax.

There are, however, some exceptions and exemptions you might be eligible for, such as:

  • Short Visits: Brief visits (less than 60 days in a year) to Hong Kong for work might not trigger tax implications.

Additional Resources:

For a more detailed understanding of the rules and potential exemptions, you can refer to the Hong Kong Inland Revenue Department (IRD) website: [IRD income received by employee outside Hong Kong ON Inland Revenue Department]

Consider consulting a tax professional in Hong Kong for professional personalized advice on your specific situation. They can help you determine your tax liabilities and potential exemptions.

How Bestar can Help

Residency Status and Salaries Tax on Hong Kong-Sourced Employment Income

Here's how Bestar can help you:

Understanding Your Tax Liability:

  • We can analyze your specific employment situation and determine if your income is subject to Hong Kong salaries tax.

  • This includes assessing factors like the location of your employer, your employment contract details, and the location where you perform your services.

Tax Exemptions and Reliefs:

  • Bestar professionals can advise you on potential tax exemptions or reliefs you might qualify for, such as the exemption for non-Hong Kong employment or the short-visit rule.

Tax Return Preparation and Filing:

  • If you are liable for Hong Kong salaries tax, we can assist you with preparing and filing your tax return accurately and efficiently.

Optimizing Your Tax Situation:

  • We can help you develop tax-saving strategies that comply with Hong Kong regulations.

Communication with the Inland Revenue Department (IRD):

  • Bestar tax professionals can represent you and communicate with the IRD on your behalf if necessary.

Consult Bestar: Bestar specializes in Hong Kong tax. We can provide in-depth tax advice on your specific situation. We have qualified tax professionals on staff. Check our website or contact us to confirm the specific services we offer for non-resident employees.

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