Hong Kong Salaries Tax How the 60-Day Rule Affects Your Tax Liability
Understand Hong Kong salaries tax, the 60-day rule for non-residents, and the filing requirements for employees and employers.
Hong Kong Salaries Tax and the 60-Day Rule Explained Clearly
Hong Kong Salaries Tax 60 Day Rule
Section 8(1B) of the Inland Revenue Ordinance provides the statutory exemption. An individual present in Hong Kong for not more than 60 days during the year of assessment pays no salaries tax on that employment income, provided the employment is not with the Hong Kong Government. The rule applies regardless of whether duties are performed inside or outside Hong Kong during those 60 days.
The IRD counts days of physical presence. The day of arrival and the day of departure both count. A day spent partly in Hong Kong counts as a full day. The exemption is automatic. No application is needed.
If presence exceeds 60 days, the full territorial source rules apply. Income may then be apportioned based on duties performed in Hong Kong.
Hong Kong IRD Salaries Tax Rates
Salaries tax is charged at progressive rates on net chargeable income, or at a standard rate on total assessable income, whichever is lower. The IRD calculates both methods and assesses the lower amount. For the year of assessment 2025-26, the progressive rates are:
| Net chargeable income band (HK$) | Rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder | 17% |
The standard rate is 15% on total assessable income before allowances and deductions. The progressive rates apply after deducting allowances and deductions.
Hong Kong Salaries Tax for Non-Residents
Non-resident employees are subject to salaries tax only on income arising in or derived from Hong Kong. The 60-day rule exempts those present for 60 days or fewer.
For non-residents present longer than 60 days, the IRD applies time apportionment. Income is taxed in proportion to the number of days spent in Hong Kong performing employment duties, relative to total working days in the year. Non-residents must still file a tax return if they have assessable income. The IRD issues Form BIR60 to individuals. A non-resident with no Hong Kong source income may not receive a return, but must notify the IRD if they believe they are chargeable.
Hong Kong Salaries Tax Filing Requirements
Individuals file salaries tax returns on Form BIR60. The IRD issues this return to most individuals in Hong Kong. The return is due within one month of the issue date. The IRD often grants extensions. The return covers income, allowances, and deductions for the year of assessment.
Employers have separate filing obligations. The annual employer's return is filed on Form BIR56A, accompanied by Forms IR56B for each employee. Employers must also notify the IRD of:
- New employees using Form IR56E
- Employees about to cease employment using Form IR56F
- Employees about to leave Hong Kong using Form IR56G
- Payments to persons other than employees using Form IR56M
These forms must be filed within specified timeframes. File Form IR56E within three months of the employee's commencement. File Form IR56F and Form IR56G at least one month before the cessation or departure.
Assessable Income, Allowances and Deductions
Assessable income includes salaries, wages, commissions, bonuses, tips, leave pay, and perquisites. It also includes benefits such as accommodation provided by the employer, valued at 10% of the employee's total remuneration or the actual rental value if lower.
Allowances reduce net chargeable income. The main allowances for 2025-26 include:
- Basic allowance: HK$132,000
- Married person's allowance: HK$264,000
- Child allowance: HK$130,000 per child (first to ninth child)
- Dependent parent allowance: HK$25,000 to HK$50,000 depending on age and residence
Deductions include charitable donations, mandatory provident fund contributions, self-education expenses, and home loan interest. Home loan interest is capped at HK$100,000 per year.
Provisional Tax and Tax Returns
Provisional salaries tax is payable in two instalments. The first instalment is due in December of the year of assessment. The second is due in April of the following year. The IRD estimates the tax based on the previous year's income. If actual income is lower, apply to hold over payment of provisional tax.
Tax returns are issued annually. The IRD sends Form BIR60 to individuals in April or May. Complete and return it within one month. Late filing attracts penalties under section 80 of the Inland Revenue Ordinance. Additional tax under section 82A may be imposed.
Contrast with Profits Tax
Salaries tax differs from profits tax in its territorial scope. Profits tax applies to profits arising in or derived from Hong Kong from a trade, profession or business, following the territorial source principle. The IRD's guidance on locality of profits is set out in Departmental Interpretation and Practice Note 21 (DIPN 21). Salaries tax focuses on the location of the employment and the employee's physical presence. The 60-day rule is unique to salaries tax. It has no equivalent in profits tax.
Practical Steps for Employers and Employees
Maintain records of employee presence in Hong Kong, particularly for short-term visitors. If an employee is present for 60 days or fewer, the employer may not need to report the income on Form IR56B. File the form anyway if the employee is otherwise chargeable.
Non-resident employees must track their days in Hong Kong. If they exceed 60 days, they must file a tax return and may claim time apportionment. The IRD provides guidance on calculating days and apportioning income.
For further information, consult the IRD website at ird.gov.hk or seek professional advice from a licensed tax adviser.
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