Salaries tax is one of Hong Kong's 3 direct taxes, alongside profits tax and property tax. It applies to income earned from employment, office, or pension where the income arises in or is derived from Hong Kong. The system is progressive, with rates capped by a standard rate. You pay whichever results in the lower tax bill.
This guide covers who pays salaries tax, what income is included, how tax is calculated, the allowances and deductions available, how to file, and what happens if you miss a deadline. For the broader Hong Kong tax system, see our corporate tax guide.
Highlights of this article
- Salaries tax applies to income from employment in Hong Kong, assessed on the territorial principle: only income arising in or derived from Hong Kong is taxable.
- Short-visit exemption: income from services rendered in Hong Kong during visits of 60 days or fewer in a year of assessment is exempt from salaries tax.
- Tax is the lower of 2 calculations: progressive rates (2%/6%/10%/14%/17% on net chargeable income) or the standard rate (15% on the first HKD 5,000,000 of net income, 16% above).
- Basic personal allowance is HKD 132,000. Additional allowances apply for married persons, dependents, children, and others.
- Mandatory MPF contributions are deductible up to HKD 18,000 per year for salaries tax purposes.
- Tax return (Form BIR60) is issued in May each year and due by 1 June. Tax is paid in 2 installments (approximately 75% in January, 25% in April).
What income is subject to salaries tax?
Salaries tax covers income from any office, employment, or pension arising in or derived from Hong Kong. The territorial principle applies: income from work performed entirely outside Hong Kong is generally not taxable, regardless of the employee's nationality or residency.
Taxable income includes:
- Basic salary and wages
- Bonuses and commissions
- Director's fees
- Allowances paid in cash (housing, transport, meals)
- Leave pay, severance pay above statutory amounts
- Benefits in kind (company car, housing provided by employer)
Generally exempt:
- Statutory severance payment calculated under the Employment Ordinance formula
- Income from services rendered entirely outside Hong Kong
- MPF mandatory contributions (deductible, not exempt)
- Certain employer-provided benefits such as medical insurance premiums
The 60-day exemption
Income from services rendered in Hong Kong during visits that do not exceed 60 days in a year of assessment (1 April to 31 March) is exempt from salaries tax. This commonly applies to foreign employees on short assignments or business trips to Hong Kong.
Director's fees from a Hong Kong company are always taxable, regardless of the number of days in Hong Kong.
Who is liable for salaries tax?
Any individual earning income from employment in Hong Kong is liable, regardless of nationality or residency status. This includes:
- Hong Kong residents employed in Hong Kong
- Non-residents working in Hong Kong for more than 60 days in a year
- Directors of Hong Kong companies (always liable for director's fees)
Self-employed persons pay profits tax, not salaries tax.
Salaries tax rates (2024/25 onwards)
Salaries tax is calculated using whichever of these 2 methods produces the lower tax bill:
Progressive rates
Applied to net chargeable income (after allowances and deductions):
| Net chargeable income (HKD) | Tax rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder | 17% |
Standard rate (from 2024/25)
| Net income after deductions (HKD) | Rate |
|---|---|
| First 5,000,000 | 15% |
| Above 5,000,000 | 16% |
The IRD calculates both and applies whichever is lower.
Example: An employee with net chargeable income of HKD 200,000:
- Progressive: (50,000 × 2%) + (50,000 × 6%) + (50,000 × 10%) + (50,000 × 14%) = HKD 16,000
- Standard rate: 200,000 × 15% = HKD 30,000
- Tax payable: HKD 16,000 (progressive is lower)
Allowances that reduce net chargeable income
The IRD grants personal allowances that are deducted from assessable income before applying tax rates:
| Allowance | Amount (2024/25) |
|---|---|
| Basic personal allowance | HKD 132,000 |
| Married person's allowance | HKD 264,000 |
| Child allowance (per child, 1st–9th) | HKD 120,000 |
| Dependent parent/grandparent allowance (each) | HKD 50,000 |
| Single parent allowance | HKD 132,000 |
| Disabled dependent allowance (each) | HKD 75,000 |
Deductions available
In addition to allowances, specific deductions reduce assessable income:
| Deduction | Cap |
|---|---|
| Mandatory MPF contributions | HKD 18,000/year |
| MPF voluntary contributions + qualifying annuity premiums (combined) | HKD 60,000/year |
| Self-education expenses (prescribed courses) | HKD 100,000/year |
| Home loan interest | HKD 100,000/year (15-year limit) |
| Domestic rents paid | HKD 100,000/year |
| Elderly residential care expenses | HKD 100,000/year |
| Voluntary Health Insurance Scheme (VHIS) premiums | HKD 8,000 per insured person/year |
| Charitable donations (to approved institutions) | 35% of assessable income |
How to calculate your tax bill
Step 1: Calculate assessable income
Total all taxable income from employment in Hong Kong: salary, bonuses, commissions, director's fees, allowances.
Step 2: Deduct allowable expenses
Subtract expenses incurred in producing the income (professional fees, travel expenses with documentation). These must be wholly, exclusively, and necessarily incurred in producing the income.
Step 3: Apply deductions
Subtract deductible items: MPF contributions, home loan interest, self-education expenses, charitable donations, etc.
Step 4: Apply personal allowances
Subtract applicable allowances (basic personal, married person's, child, dependent parent, etc.) to arrive at net chargeable income.
Step 5: Calculate tax
Apply progressive rates to net chargeable income. Also calculate tax at standard rate. Pay whichever is lower.
Filing your salaries tax return (BIR60)
The Hong Kong tax year runs from 1 April to 31 March. Each year, the IRD issues Form BIR60 (the individual tax return) in May. The filing deadline is 1 June (or later if the IRD grants an extension).
Filing process:
- Gather income documents (salary slips, bonus letters, P60-equivalent from employer)
- Collect receipts for deductions (MPF statements, home loan certificates, medical insurance records)
- Complete Form BIR60 online via eTAX or in paper
- Submit by the deadline
Late filing results in penalties. Employers must also file an Employer's Return (BIR56A with IR56B forms) reporting each employee's income to the IRD. See our Employer's Return guide.
Payment of salaries tax
Once the IRD issues an assessment, salaries tax is paid in 2 installments:
- First installment: approximately 75% of the total, typically due in January
- Second installment: the remaining 25%, typically due in April (3 months later)
The assessment also includes provisional salaries tax for the current year, billed simultaneously. If your current-year income is expected to be at least 10% lower than the previous year, you can apply to hold over the provisional tax. See our provisional tax holdover guide.
Payment methods via eTAX:
- Online banking or PPS payment
- Bank transfer (with tax assessment number)
- ATM payment (banks accepting government payments)
- Cheque by mail
Penalties for late payment:
- 5% surcharge on unpaid tax after the due date
- Further 10% if outstanding after 6 months
- Legal proceedings for persistent non-payment
Personal assessment option
Individuals with income from multiple sources (employment, business, property rental) can elect Personal Assessment to aggregate all income under a single calculation. This may result in a lower overall tax bill when:
- Business losses can be offset against employment income
- Tax deductions and allowances can be applied more efficiently across income types
Personal assessment must be elected separately each year on the individual tax return.
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