Do I charge tax on invoices in Hong Kong

Do I Charge Tax on Invoices in Hong Kong

No. Hong Kong has no general sales tax, value-added tax (VAT), or goods and services tax (GST). Issue an invoice for the full amount of the goods or services without adding a tax line. Business owners from VAT or GST jurisdictions often expect to add a tax percentage to every sale. That step does not exist here.

Your business pays profits tax on its net assessable profits, not on individual transactions. The Inland Revenue Department assesses your company's profit for the year, applies the two-tiered profits tax rate (8.25% on the first HK$2,000,000 of assessable profits for corporations, and 16.5% on the remainder), and issues a tax assessment. You do not collect that tax from your customers at the point of sale.

Hong Kong Sales Tax

Hong Kong does not impose a sales tax. No legislation requires a business to collect a percentage of the sale price and remit it to the government. The absence of a sales tax is a structural feature of Hong Kong's tax system, which relies primarily on profits tax, salaries tax, and stamp duty. When you prepare an invoice, the total shown is the price of the goods or services. No additional charge is added for tax.

VAT or GST in Hong Kong

There is no VAT or GST in Hong Kong. The government has studied the possibility of introducing a goods and services tax on several occasions but has not implemented one. For practical purposes, a Hong Kong business treats every invoice as a final-price document. There is no input tax to reclaim and no output tax to charge. This simplifies bookkeeping because you do not need to track VAT on purchases or sales.

Invoicing Tax Hong Kong

The phrase "invoicing tax hong kong" often confuses newcomers who assume an invoice must show a tax component to be valid. In Hong Kong, a tax invoice is not a statutory concept under the Inland Revenue Ordinance. Your invoice should include your business name, your Business Registration Certificate number, the date, a description of the goods or services, and the amount due. The absence of a tax line does not make the invoice invalid.

Hong Kong Invoice Requirements

The Inland Revenue Department expects your invoices to support your accounting records and tax filings. Your records must be sufficient to show and explain your transactions and to disclose your financial position with reasonable accuracy. Invoices should be kept for at least seven years. There is no prescribed format, but the invoice should clearly identify the seller and the transaction. If you issue invoices to overseas customers, the same rules apply: you do not charge Hong Kong tax on the invoice, and the territorial source principle determines whether the resulting profit is taxable in Hong Kong.

Other Taxes That May Apply

While you do not charge tax on invoices, other taxes may arise depending on the transaction. Stamp duty applies to transfers of Hong Kong stock at 0.1% from the buyer and 0.1% from the seller, plus a fixed HK$5 on the instrument of transfer. Stamp duty also applies to property transactions. If you employ staff, you must handle salaries tax through the employer's return (Form BIR56A) and make Mandatory Provident Fund contributions. These obligations are separate from invoicing and are settled with the Inland Revenue Department or the MPF trustee, not collected from customers.

What to Do Next

Issue your invoices for the gross amount of the sale. Register your business with the Inland Revenue Department and obtain a Business Registration Certificate. Keep your invoices and accounting records for seven years. File your profits tax return (Form BIR51) each year when the Inland Revenue Department issues it, and pay any provisional tax as assessed. If you are unsure whether a particular transaction is subject to stamp duty or another tax, consult a tax adviser who practises in Hong Kong.