Companies Registry, Government of the Hong Kong Special Administrative Region

Hong Kong does not apply a value-added tax (VAT / GST). 

There is no traditional VAT system in place within the jurisdiction: most goods and services, including imports and exports, are not subject to VAT. This rule applies to both local and foreign companies registered in Hong Kong.

All companies incorporated in Hong Kong are exempt from collecting or paying VAT, except in cases where they conduct business in other countries where VAT is applicable. In such cases, the company must comply with the tax regulations of the relevant jurisdiction.

Hong Kong follows a territorial taxation principle, meaning that only profits arising from or derived in Hong Kong are subject to corporate income tax. Profits earned outside of Hong Kong are exempt from taxation — even if they are later remitted to Hong Kong.

Corporate Profits Tax Rates:

• 8.25% — on the first HKD 2,000,000 of assessable profits (for private companies)
• 16.5% — on the portion of profits exceeding HKD 2,000,000

For non-resident companies conducting business outside of Hong Kong, the tax rate may be 0%, provided they can prove that the income has no Hong Kong source. The Inland Revenue Department (IRD) determines this based on an analysis of the company’s operations and value creation chain.

Entities exempt from corporate tax:

• Non-profit and charitable organizations registered with the IRD
• Companies that do not carry out business in Hong Kong and earn no income from within its territory
• Certain pension and educational funds, if they meet specific eligibility criteria

Hong Kong imposes an Excise Duty, which applies exclusively to specific categories of goods. The primary purpose of this tax is to regulate the circulation of potentially harmful or controlled products.

Excise Duty is levied on the import, manufacture, and storage of the following goods:

• Tobacco products;
• Alcoholic beverages with an alcohol content exceeding 30%;
• Methanol;
• Hydrocarbon oil (including petrol and aviation fuel).

Excise duty rates vary depending on the type and quantity of the product and are set in accordance with local legislation:

• Tobacco — taxed by weight and quantity (including cigarettes, cigars, and loose tobacco);
• High-strength alcohol — taxed per litre of pure alcohol (HKD/litre);
• Fuel and methanol — taxed per litre or tonne according to established rates.

Alcoholic beverages with an alcohol content below 30% (such as wine, beer, and liqueurs) have been exempt from excise duty since 2008.

Companies dealing with dutiable commodities must register with the Hong Kong Customs and Excise Department, maintain proper records, obtain relevant licenses, and submit regular reports.

Hong Kong is a free port where no customs duties are levied on most imported and exported goods. This policy applies to a wide range of products, including raw materials, equipment, finished goods, and food, making Hong Kong one of the most liberal trade regimes in the world.

The only exceptions are a few categories of dutiable commodities, which are subject to Excise Duty:

• Tobacco products;
• Alcoholic beverages with an alcohol content exceeding 30%;
• Methanol;
• Hydrocarbon oil (including petrol and aviation fuel).

Import, export, and transit of all other goods through Hong Kong are exempt from duties, quotas, or other trade restrictions. This greatly simplifies international logistics and reduces the cost of moving goods through the region.

Goods are not subject to customs declaration for duty purposes, except in the case of dutiable items. However, companies importing specific categories of goods (e.g., pharmaceuticals, chemicals, or products of animal origin) must comply with licensing requirements and sanitary regulations.

Salaries Tax in Hong Kong is levied only on income derived from employment physically performed within Hong Kong. The tax system is based on the territorial source principle: if the work is carried out outside Hong Kong, the related income is not subject to taxation — even if the funds are transferred to a Hong Kong bank account.

Taxable income includes:

• Salaries and wages
• Bonuses and commissions
• Other forms of employment-related compensation

The following types of income are not subject to tax:

• Dividends
• Interest
• Capital gains
• Inheritance and gifts

The tax is calculated on a progressive scale ranging from 2% to 17%, with a maximum effective rate of 15% after the application of standard deductions.

There are no taxes in Hong Kong on capital gains, dividends, interest, or inheritance.

There is also no luxury tax or property tax (except for rental income from Hong Kong property).

The tax system is designed to be as simple and business-friendly as possible, supporting entrepreneurship and international trade.

• Charged upon the transfer of:

• Real estate;
• Shares of Hong Kong companies.

• Rates depend on the asset value and terms of the transaction.
• The rate for residential property transfer can reach up to 15%.
• The rate for share transfer is 0.13% of the transaction value.

• Property Tax is levied on landlords.
• Rate: 15% of the gross rental income, after a standard deduction of 20% for expenses.