Five Tips To Tax Chargeable Foreigners Self-Employed or Working In Hong Kong

Foreigners who are working in Hong Kong either self-employed or being employed by an employer must comply with the rules set out by the HK Inland Revenue Department (IRD). A professional immigration consultant (or agency) in Hong Kong will always be able to provide more detailed information regarding the requirements from the IRD for HK working foreigners including employment visas, tax return filing, and more.

For the employed:

Tip 1: An individual who are non permanent resident (i.e. foreigner) working in Hong Kong is eligible to declare and pay salaries tax. In short, salaries tax is charged on each person in respect of his income received while working in Hong Kong. Fortunately not all the items in your income is taxable. The taxable (or chargeable) income would have to include your salaries, director’s fees, allowances, major benefits, benefits that are fringe, salary tax covered by the employer, share awards, share options, any back pay (including contract incentives or bonuses, deferred pay, or pay in arrears), termination payments, pensions, retirement benefits, tips or gratuities from any individual, or more.

Tip 2: Who is income tax chargeable? When you are eligible to pay tax for any year of assessment (when working in HK), you will have to notify the Hong Kong Inland Revenue Department (IRD) in the form of writing within 4 months after the end of the basis period for the year when you are eligible. The exception to this is that when you have already received a return from the Inland Revenue Department. In this case, you will need to complete and submit it for filing by the due date.

Tip 3: As a foreigner, if you have plan to leave Hong Kong, the HK Inland Revenue Ordinance (IRO) has a requirement. It states that all people chargeable to tax must notify the IRD no later than one month before the expected date of departure. When IRD receives your notification, it will settle whether you are required to pay for tax. When you fail to comply with the requirements of IRD, it may result with penalty. If you happen to be one of those staffs/employees who travel very frequently (due to business), you will only have to file tax returns and pay tax normally.

For the self-employed:

Tip 4: Besides people who work for an employer, there are people who are self-employed. Foreigners who make revenue through buying and selling physical items or digital products, or providing services (professionally or personal) to a company, you are regarded as a self-employed person. As a self-employed person, you are eligible to be charged for paying profits tax on the assessable profits of your company (whether it is a sole proprietorship or partnership).

Tip 5: The requirement is for you to keep all the business records for a minimum of seven years. You must write to notify the HK Inland Revenue Department (IRD) when there is any change of your business status.