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Salaries tax exemption on income from non-Hong Kong employment positions

The tax regulations stipulate that all income derived from employment in Hong Kong must be fully subject to salaries tax. However, if the taxpayer is a non-Hong Kong employee who needs to work in Hong Kong, only the portion of income earned from services in Hong Kong will be subject to salaries tax, that is, the Inland Revenue Department will calculate it based on the number of days the employee stays in Hong Kong Income derived from Hong Kong services. This income also includes relative holiday wages.

In deciding whether a taxpayer is a non-Hong Kong employee, the Inland Revenue Department will consider the following three main points:

1. Employer’s registered place, headquarters, business address, etc…

2. Where do the employee and employer negotiate and sign an employment contract, and where is the contract bound by law

3. Where does the employer pay the employees?

Generally speaking, the Hong Kong Inland Revenue Department will focus on the first two points above. Non-Hong Kong employees are usually not transferred to Hong Kong for a long time. If the Inland Revenue Department finds that these employees have been working in Hong Kong for a long time without being transferred back to overseas companies, the Inland Revenue Department will find out who the real employer is in Hong Kong or overseas. Please note that the above tariffs do not apply to employees who belong to the category of director positions.

The above information is for reference only. If in doubt, we welcome your tax inquiries

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