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Banks & Taxes in Hong Kong
A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes
Hong Kong’s place at the heart of the global finance industry means it is an expat-friendly city when it comes to personal banking. This guide covers all aspects of managing finances in Hong Kong, from opening a bank account to what to expect when you receive your tax bill.
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Hong Kong offers a wide selection of local and international banks. You should not have problems opening a bank account here whether you are a resident or not. And while, in general, banking system is fairly modern, note that people in Hong Kong often rely on checks to transfer their money.
Hong Kong tax system is fairly easy to understand and maneuver as well. With a maximum tax rate of 17%, you may find yourself not dreading the tax bill so much.
How to Open a Bank Account in Hong Kong
The specific criteria you have to fulfill when opening a bank account in Hong Kong as a non-resident vary from bank to bank. In general, however, it is much easier to do so in Hong Kong rather than in Europe or the US. The procedure takes up to two weeks and your application is highly unlikely to be denied.
How to Choose Your Bank in Hong Kong
With 200 banks from about 30 different countries, Hong Kong offers a wide variety of options for anyone. The branches, especially around the more international areas like Central or Causeway Bay, usually have English-speaking staff that can guide you through the process of obtaining an account.
Top Hong Kong Banks
- DBS Bank
- Standard Chartered
- Hang Seng Bank
- Bank of East Asia
- Bank of China
Bank of East Asia and Citibank have recently been awarded for being the best online banks in China. Citibank and Bank of China were recognized as the best domestic-international banks.
Can You Open a Bank Account in Hong Kong?
Typically, the documents required to open a savings or current bank account as a foreigner include:
- your Hong Kong Identity Card or a valid passport;
- proof of address in Hong Kong or your home country (you do not have to be a Hong Kong resident to open a bank account in Hong Kong);
- completed application form.
While some banks do offer an option to apply for a bank account online for non-residents, that only means that you can fill in the application form in advance. You will need to visit the branch of your choice in order to complete the process of setting up a bank account in Hong Kong.
Banking in Hong Kong: Credit or Debit Cards?
Obtaining a credit card should not be a problem; however, there may be different requirements regarding your credentials and annual salary for various types of cards and credit limits. Generally speaking, in addition to the above-mentioned documents, you will also need to present a proof of your salary or your salary statements from the last several months in order to get a credit account.
Debit cards in Hong Kong, however, are not common, especially VISA and Mastercard. There is a high chance you will have trouble paying with them, including payments for the goods you shop for online.
Banking in Hong Kong: Paper Checks
Unlike in many other countries, checks are still a commonly used method of payment in Hong Kong, even between different companies. You normally receive a check booklet for your account from your bank. There are usually no fees for using or depositing checks in Hong Kong. However, checks are not an accepted method of payment in retail. In order to overcome the limitations of paper checks, banks have recently introduced an e-Check system.
Bank Account Services in Hong Kong
All banks in Hong Kong offer you the services you would generally expect from institutions with an international standing. Both product information and account statements are usually available in English or Chinese.
Services you get at nearly any bank include:
- Savings and current accounts
- Time deposit accounts
- Foreign currency accounts
- Standing orders
- Money transfers
- Currency exchange (sometimes free of charge for account holders)
- Direct debit
- Investment advice
- Insurance services
What are Common Bank Account Fees?
Most banks in Hong Kong charge for account maintenance and no fee bank accounts are not common. The price can go from 50 to 150 HKD (6.5 to 10 USD) each month and will generally depend on the type of account you hold, as well as your regular income or the average balance. In some cases, you can avoid paying the fee by maintaining a set amount of money in your account.
Keep in mind that some accounts might also require minimum deposits. It will depend on the bank of your choosing as well as the type of account you wish to open. Some savings accounts ask for 10 HKD (1 USD) as initial deposit, while others might require you to start your account with 200,000 HKD (25,700 USD).
Most banks also charge other service fees, such as for closing an account, keeping an inactive account with less than a certain lump sum, and changing standing orders. The fee the bank charges you for overdrawing your account largely depends on the type of account you hold.
What are the Telephone and Online Banking Options?
Telephone banking and online banking are readily available at most Hong Kong banks and the services are usually free of charge. Lots of telephone services operate 24 hours a day, 7 days a week. You can use online and telephone banking to pay utility bills or government fines. Mobile banking services are also available – just ask your bank of choice for further details.
Moreover, you can sign up with the local service called PPS – a 24-hour bill payment solution that allows you to pay your bills via internet or phone. To become a customer, you need to register at one of the PPS terminals available all over Hong Kong. For more information, check the PPS website.
There is a minor drawback to telephone and online banking in Hong Kong: Money transfers are not free of charge. Normally, you can only transfer money without paying fees if the recipient has an account with the same bank as the sender. You can expect for an interbank transfer to cost you about 200 HKD (25 USD). This is the main reason many expats start using checks while living in Hong Kong.
ATMs in Hong Kong
ATMs are located all over the city. Often, they can be used for more than just withdrawing cash. For example: paying bills or depositing checks or cash.
There are three ATM networks in Hong Kong: ETC (HSBC and Hang Seng Bank), JETCO (all other banks), and AEON. Using an ATM is free of charge if you withdraw from an ATM whose network your own bank belongs to. Otherwise, you pay a service charge.
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What is the Tax System in Hong Kong?
When expats are trying to understand what the tax system is like in Hong Kong, it is important to note a few things. For example, if you have acquired along-term Hong Kong visa, you have to pay Hong Kong income tax, just like every other fiscal resident. Another thing to keep in mind, especially for frequent travelers, is that your income is taxed according to the territorial principle. This means that only what you earn or accrue in Hong Kong is subject to Hong Kong income tax.
The Hong Kong Tax System
Tax rates in Hong Kong deserve their reputation of being competitively low. They rise progressively with higher salaries. Nevertheless, the maximum rate, even for the top tax bracket, is only 17%.
To avoid double taxation, Hong Kong has concluded negotiations with a number of countries regarding double taxation relief. These agreements come into play if a fiscal resident has to pay taxes on their income in other countries and thus would have to pay for the same income twice.
Keep in mind that the following information does not constitute any legal advice. For more detailed questions on taxation in Hong Kong, contact the Inland Revenue Department (IRD). We would also recommend you talk to a trustworthy tax advisor for advice on your individual situation.
Types of Taxes in Hong Kong
Salaries, Property, and Profits taxes constitute the direct tax you or your employer will have to file at the end of the fiscal year. Stamp, Betting, and Estate duties are indirect taxes of Hong Kong. The tax year starts on 1 April and continues until 31 March next year.
Salaries tax will probably be the biggest tax burden for you when living in Hong Kong. All wages, salaries, and director’s fees are subject to this tax. Additionally, the large majority of all other benefits you might receive from your company are also taxable. Such taxable benefits include bonuses, commission and rebates, leave pay, end-of-contract gratuities, and others. Any shares or options that are part of your remuneration are also taxed, as is accommodation provided by your employer. Furthermore, it does not matter when these payments are made or whether they exceed your terms of employment.
If you travel to Hong Kong for work irregularly, and spend less than 60 days there doing so, you should be exempt from these taxes.
How to Calculate Salaries Tax
Salaries Tax can be calculated either at progressive rates on your net chargeable income or standard rates on your net income—whichever one is lower. Follow the formulas to calculate them both:
- Total Income – Deductions = Net Income
- Total Income – Deductions – Allowances = Net Chargeable Income
The deductions constitute:
- Self-education expenses
- Charitable donations
- Mandatory retirement scheme and provident fund contributions
- Home loan interest
- Elderly care
You are not required to provide evidence about your deductions. However, you will be required to provide proof of the deductions if your tax files are being reviewed. That is why it is advisable to keep payment receipts and other documents for six years after you file the forms.
Claimable allowances include:
- Basic allowance (every tax payer’s allowance)
- Spouse allowance (doubles the basic allowance for the household)
- Child allowance
- Single parent allowance
- Dependent allowance (sibling, parent, grandparent, or a disabled person)
- Personal disability allowance
You can claim your allowances when filing your tax return either online or by mail. Just like with deductions, you are not required to provide evidence for your allowances; however, you should keep the appropriate receipts.
The Tax Brackets in Hong Kong
These are the progressive tax rates in Hong Kong. The standard (fixed) tax rate here is 15%.
|Income HKD||Income USD||Progressive Rate (%)|
|< 50,000||< 6,400||
|200,000 <||25,600 <||
For example: if your net chargeable income is 125,000 HKD (16,000 USD) per year, this is how you would calculate your taxes:
First Bracket: 50,000 – 2% = 1,000 HKD (130 USD)
Second Bracket: 50,000 – 6% = 3,000 HKD (380 USD)
Third Bracket: 25,000 – 10% = 2,500 HKD (320 USD)
Payable Taxes: 1,000 + 3,000 + 2,500 = 6,500 HKD (830 USD)
To find out how much salaries tax you will approximately have to pay in Hong Kong, check out the online tax calculator for your relevant assessment year under the section “Tax Computation.”
Once you make the calculations, you can file your tax returns online or by post.
Property Tax in Hong Kong
If you own property in Hong Kong and have income from renting said property, you need to tax the rental income. To learn more about your tax obligations as a property owner in Hong Kong, check the government’s site on Property Tax.
Self-Employment Tax in Hong Kong
Self-employment is taxable, too, and, as you can only be self-employed if you set up your own business, it is treated as Profit Tax. Self-employment is defined as “buying and selling of goods” or “providing professional or personal services”. In this case, you are charged profits tax based on the assessable profits of your proprietorship or partnership. Furthermore, there are some other obligations concerning, for example, accounting standards. Profit taxes are also applied to corporations and trustees.
Things to Remember about Tax System in Hong Kong
Hong Kong’s income tax does not include any taxes on interests, dividends, or royalties. There is nocapital gains tax in Hong Kong. The only case in which you have to pay taxes on capital gains is if shares or options are part of your regular remuneration. These are subject to the same Hong Kong income tax as normal salaries.
What is Personal Assessment?
If you are subject to more than just the salary tax, you can file a tax relief called Personal Assessment. If you wish to do so together with your partner, you can opt for Joint Assessment or Personal Assessment for Married Couples.
In order to be eligible to apply for Personal Assessment, you have to “ordinarily reside in Hong Kong”. Whether or not you get that status depends on:
- How long you are staying in Hong Kong.
- Whether you have permanent dwelling in Hong Kong.
- Whether your relatives are residing in Hong Kong.
- Whether you are working in Hong Kong.
- Whether you own property outside of Hong Kong.
Note that owning a Hong Kong ID card does not mean that you are considered to be a tax paying resident.
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