Hong Kong operates a territorial tax system: only Hong Kong-source income (profits, salaries, property) is taxed under a three-schedule structure, with foreign-source income generally outside the tax base entirely - though a 2023 amendment brought certain foreign-sourced equity disposal gains into the tax net unless the entity meets economic substance requirements. Hong Kong has no CFC regime. Hong Kong operates a self-assessment system, with the Inland Revenue Department (IRD) conducting post-filing review.
The Hong Kong tax year runs 1 April to 31 March. The individual filing deadline is generally 2 months after the return is issued, typically around June/July.
Hong Kong SAR's headline corporate income tax (CIT) rate is 16.5% corporations; 15% unincorporated businesses.
The headline personal income tax (PIT) rate is 16%.
0% - Hong Kong has no VAT, GST, or general sales tax; government revenue relies on profits tax, salaries tax, and stamp duty instead.
Hong Kong operates a territorial basis of taxation: liability turns on the source of income, not on residence or domicile, so residency status does not by itself determine whether income is taxable. Residency still matters for accessing double tax treaty relief. A company is generally Hong Kong tax resident if incorporated there, or if incorporated elsewhere but normally managed and controlled ("central management and control," a factual test - board meeting location, where top executives exercise authority, location of accounting records) in Hong Kong. An individual is resident if they ordinarily reside in Hong Kong (a permanent home with some degree of continuity - a qualitative test, not a day count) or stay more than 180 days in a year of assessment, or more than 300 days across two consecutive years.
A non-Hong-Kong entity has a Hong Kong permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Hong Kong on the entity's behalf, following the OECD Model Treaty definition as applied under Hong Kong domestic law and any applicable tax treaty.
Hong Kong has no Controlled Foreign Company regime.
Hong Kong has no thin capitalization rules. Interest deductibility instead follows specific statutory deductibility conditions and general anti-avoidance provisions rather than a debt-to-equity test. Since the Foreign Sourced Income Exemption (FSIE) regime took effect in January 2023, certain foreign-sourced passive income (interest, dividends, disposal gains) can become taxable in Hong Kong if not properly structured or substantiated as genuinely foreign - a meaningful exception to the territorial principle worth flagging for any foreign passive income analysis.
Hong Kong does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Hong Kong does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; consistent with Hong Kong's territorial (or primarily source-based) system described in Tax System above, foreign-source income generally falls outside the domestic tax base rather than being reported and then taxed.
Hong Kong's territorial system already excludes most foreign-source income from the domestic tax base, functioning as a broader substitute for a conventional participation exemption - subject to the 2023 economic-substance-conditioned exception for foreign-sourced equity disposal gains (see Tax System above).
Hong Kong's territorial tax system limits the practical role of a foreign tax credit, since foreign-source income is generally outside the Hong Kong tax base to begin with, aside from the specific foreign-sourced income categories now subject to tax under the 2023 amendment.
Per Hong Kong's own Financial Services and the Treasury Bureau, as of July 2026 Hong Kong has signed Comprehensive Double Taxation Agreements (CDTAs) with 59 jurisdictions, with negotiations underway or scheduled with a further 16. Not all signed CDTAs are yet in force pending ratification by both sides. Many CDTAs are modified by the OECD's Multilateral Instrument (MLI), adding anti-abuse measures including the Principal Purpose Test.