The 60-day rule for Hong Kong salaries tax

What Is the 60-Day Rule for Salaries Tax

The 60-day rule for salaries tax exempts employment income from Hong Kong salaries tax when an individual visits Hong Kong for not more than 60 days during the year of assessment. It applies to income for services rendered in Hong Kong during those short visits, so the employee pays no salaries tax on that portion of their employment income even though the work was performed here.

The Inland Revenue Department (IRD) introduced this rule to simplify tax for short-term visitors who perform duties in Hong Kong but whose employment is based elsewhere. Without it, any income from services performed in Hong Kong would be subject to salaries tax under the territorial source principle. The 60-day rule provides a clear exemption threshold.

Hong Kong 60 Day Rule

The Hong Kong 60 day rule is found in section 8(1B) of the Inland Revenue Ordinance (Cap. 112). It applies to any person who visits Hong Kong for not more than 60 days in total during the year of assessment and performs services here. Days of presence are counted as calendar days, including arrival and departure. Partial days count as full days.

The exemption covers all employment income attributable to services performed in Hong Kong during the visit. It does not matter whether the employer is based in Hong Kong or overseas. If the visitor stays for 61 days or more, the exemption is lost entirely for that year of assessment, and the full amount of income derived from Hong Kong services becomes chargeable to salaries tax.

Salaries Tax 60 Day Rule HK

The salaries tax 60 day rule HK applies only to individuals who are not ordinarily resident in Hong Kong. A person who is ordinarily resident in Hong Kong cannot claim the exemption, because they are already subject to salaries tax on their Hong Kong-sourced income regardless of the number of days spent in the territory.

The rule also does not apply to government employees or to crew members of ships or aircraft, who have their own specific tax treatment. For all other employees, the rule is straightforward: visit Hong Kong for 60 days or fewer in a year of assessment and perform employment duties here, and the income from those duties is exempt from salaries tax.

Hong Kong Short Visits Tax

Hong Kong short visits tax treatment under the 60-day rule is one of the most generous exemptions in the Inland Revenue Ordinance. It allows an employer to send staff to Hong Kong for short assignments, training, or meetings without creating a salaries tax liability for the employee. The employer still has filing obligations.

The employer must report the employee's remuneration on the annual employer's return, Form BIR56A, and on the individual employee return, Form IR56B, even if the employee qualifies for the 60-day exemption. The IRD uses these returns to verify that the exemption conditions are met. If the employer fails to file, the IRD may issue an estimated tax assessment against the employee.

IRD 60 Day Rule

The IRD 60 day rule requires careful record-keeping. The employee and employer must be able to demonstrate the exact number of days the employee was present in Hong Kong during the year of assessment. The IRD may request travel records, passport stamps, boarding passes, and employment contracts to confirm the days of presence and the nature of the services performed.

If the employee makes multiple visits to Hong Kong during the year, the total days across all visits are added together. A single visit of 61 days or more disqualifies the exemption for the entire year. The year of assessment runs from 1 April to 31 March, so the count is taken over that period, not over a calendar year.

The exemption applies only to income from an office or employment. It does not apply to director's fees, consultancy income, or income from a trade or business. Those types of income are assessed under profits tax or salaries tax without the benefit of the 60-day rule.

Employer Obligations

Even when the 60-day rule applies, the employer must still file the employer's return (Form BIR56A) and the individual employee return (Form IR56B) with the IRD. The employer should indicate on the return that the employee qualifies for the exemption. The IRD will then issue a tax assessment reflecting the exemption, or may request further information before doing so.

The employer should also keep records of the employee's travel dates and the services performed in Hong Kong for at least seven years after the end of the year of assessment, as the IRD may review the exemption in a later year. If the IRD determines that the exemption was claimed incorrectly, it may assess the employee for the full amount of tax due, plus penalties.

Summary of Key Points

• The 60-day rule exempts employment income from salaries tax for services performed in Hong Kong during visits of 60 days or fewer in a year of assessment.
• The rule applies only to individuals who are not ordinarily resident in Hong Kong.
• Days are counted as calendar days, including partial days.
• Multiple visits are aggregated; a single visit of 61 days or more disqualifies the exemption.
• The employer must still file Form BIR56A and Form IR56B.
• Records of travel and services must be kept for seven years.