A person has Hong Kong-sourced employment income if the employment is a Hong Kong employment or in case the employment is a non-Hong Kong employment, the employment services are rendered by the person in Hong Kong SAR.

The Hong Kong Inland Revenue Department (HKIRD) will generally accept that an employment is a non-Hong Kong employment if all of the following three conditions are met:

• The contract of employment was negotiated and entered into, and it is enforceable outside Hong Kong SAR.
• The employer is a resident outside Hong Kong SAR.
• The employee’s remuneration is paid outside Hong Kong SAR.

If any of the above conditions is not met, the employment will likely be considered by the HKIRD as Hong Kong employment.

For a Hong Kong employment, employment income is not taxable if all of the employment services for a year of assessment are rendered outside Hong Kong SAR. In determining whether all the services are rendered outside Hong Kong SAR for a given year of assessment, no account is taken of services rendered in Hong Kong SAR during visits not exceeding 60 days in the basis period for the year of assessment (the so-called ‘60-day rule’).

For a non-Hong Kong employment, only income attributed to services rendered in Hong Kong SAR is subject to Hong Kong salaries tax (the so-called ‘time apportionment basis’). Similar to Hong Kong employment, the 60-day rule will apply in considering whether there are any services rendered in Hong Kong SAR in a given year of assessment under a non-Hong Kong employment (i.e. services rendered in Hong Kong SAR during visits not exceeding 60 days in the basis period for the year of assessment will be ignored).

Where the employment income of an individual is subject to tax both in Hong Kong SAR and an overseas jurisdiction that does not have a CDTA with Hong Kong SAR, a unilateral income exemption may be available under the domestic tax law to provide relief from double taxation (see the Foreign tax relief and tax treaties section for more information).

There are special rules for taxing employment income derived by seafarers and aircrew.

Carried interest received by or accrued to a qualifying employee on or after 1 April 2020 from an employment with a qualifying entity that provides investment management services to a certified investment fund in Hong Kong SAR can be wholly excluded from employment income for salaries tax purposes, subject to specified conditions.

The source of income from an office (e.g. directors’ fees) is determined by the location at which the company paying the fees is centrally managed and controlled. The ‘60-day rule’ and ‘time apportionment basis’ discussed above do not apply to income from an office.

Pensions are, in practice, subject to Hong Kong salaries tax if the funds out of which the payment is made are managed and controlled in Hong Kong SAR, and the pensions (other than a government pension) are related to services rendered in Hong Kong SAR. Similar to income from an office, the ‘60-day rule’ and ‘time-apportionment basis’ discussed above do not apply to income from a pension.

In general, a person’s income from employment, less allowable deductions and personal allowances, is chargeable to Hong Kong salaries tax at progressive rates ranging from 2% to 17% as follows:

For 2023/24:

The maximum tax for 2023/24, however, will be limited to tax at the standard rate (15%) on the net assessable income after any allowable deductions (see the Deductions section) but without the deduction of personal allowances.

In rare cases where the total amount of allowable deductions exceeds the assessable income of an individual taxpayer in any year of assessment, the excess can be carried forward indefinitely to set off against the taxpayer’s assessable income in subsequent years of assessment.