Both residents and non-residents working in Hong Kong are liable to pay salaries tax and are taxed in the same way. Salaries tax is charged on every person in respect of his / her income arising in or derived from Hong Kong from any office or employment of profit and any pension. The net chargeable income, i.e. assessable income after deductions and allowances, is charged at progressive rates. But if what one needs to pay on the basis of his / her net chargeable income exceeds the tax charged at standard rate (15%) on his / her net total income, i.e. assessable income after deductions but before allowances, then one has to pay the lower amount of tax.
Without any relationship of master and servant, if one’s income is derived from the buying and selling of goods, or from providing professional or personal services, the person is considered as self-employed carrying on a trade, business or profession. A self-employed person is chargeable to profits tax on the assessable profits of his / her sole proprietorship or partnership business.
Non-residents of Hong Kong may encounter double taxation when two or more tax jurisdictions overlap, such that the same item of income or profit is subject to tax in each. Many countries which tax their residents on a worldwide basis also provide their residents operating businesses in Hong Kong with unilateral tax credit relief for any Hong Kong tax paid on income / profit derived from Hong Kong. Hong Kong allows a deduction for foreign tax paid on turnover basis in respect of an income which is also subject to tax in Hong Kong. Businesses operating in Hong Kong therefore do not generally have problems with double taxation of income.
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