Hong Kong has not only very low taxes and sometimes is considered to be a Tax Haven, it also a very straightforward and easy to understand taxation system.
The tax system in Hong Kong is a territorial taxation system.
You only have to pay tax on income arising in or derived from Hong Kong, not on your world income.
The fiscal year ends with the 31st of March.
Shortly before that date you will get an assessment notice from the Inland Revenue Department (IRD).
You have to take care that you save enough each month to pay the tax.
In other jurisdictions the tax is automatically deducted from your salary, so you will never have a problem to pay the tax.
Quick tax overview: · No tax on capital gains · No VAT · Maximum Profits Tax: 16.
5% · Maximum Salaries Tax: 17% The profits tax has a flat rate of 17%.
The salaries tax however uses a progressive rate system which keeps the tax very low if your salary is low.
Progressive Salaries Tax System (in HK$): · On the first $40.
000 the tax rate is 2%.
· On the next $40.
000 the tax rate is 7%.
· On the next $40.
000 the tax rate is 12%.
· Everything above the $120.
000 will be taxed at 17%.
All of the above tax rates refer to the year of assessment 2008/2009.
They usually change slightly every year.
You should check out the website of the Inland Revenue Department for the current rates.