Hong Kong is well known for its low and simple taxation structure which levies tax according to the territorial source principle. Residents and non-residents may also be liable to salaries tax and profits tax in Hong Kong. This article will tell you more about it.

The Inland Revenue Ordinance (IRO) provides for the levying of three separate direct taxes – salaries tax on income from employment, an office, or any pension arising in or derived from Hong Kong, profits tax on business profits, and property tax on income from properties.

Personal assessment may reduce the tax burden on certain individual taxpayers who have to pay profits tax and/or property tax. If you only have income chargeable to salaries tax, you need not elect for personal assessment.

• More information on salaries tax and personal assessment
  http://www.gov.hk/en/residents/taxes/salaries/index.htm

If your income is derived from the buying and selling of goods, or from providing professional or personal services, you are considered as carrying on a trade, business or profession and a self-employed person.

As a self-employed person, you are chargeable to profits tax on the assessable profits of your sole proprietorship or partnership business. You should keep sufficient business records for at least 7 years, and notify the Inland Revenue Department (IRD) in writing about any changes in the status of your business.

• More information on profits tax for the self-employed
  http://www.gov.hk/en/residents/taxes/profits/index.htm

As a non-resident working or holding an office in Hong Kong, you are liable to salaries tax but not all the income is chargeable. Incomes such as payment in lieu of notice, severance payments and long service payments are not chargeable.

If you are chargeable to tax for any year of assessment, you must notify the IRD in writing not later than 4 months after the end of the basis period for the year in which you are so chargeable unless you have already received a return from the IRD.

Besides, the IRO provides that any person chargeable to tax and intending to leave Hong Kong shall notify the IRD not later than 1 month before the expected date of departure. Upon receipt of the notification, IRD will decide whether the person leaving is required to settle all tax liabilities prior to departure.

• More on tax obligations for non-residents working in Hong Kong
  http://www.gov.hk/en/nonresidents/workinghk/taxinhk/taxobligations.htm

You can pay tax by various means. Electronic tax payment is becoming more popular and convenient. You can pay tax electronically by phone (with PPS account), Internet or bank Automatic Teller Machine (ATM). You can even pay tax from overseas, whether or not you have an account with a Hong Kong bank.

• More on tax payment
  http://www.gov.hk/en/residents/taxes/taxfiling/payment/index.htm