Banks & Taxes in Hong Kong
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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 your finances in Hong Kong, from opening a bank account to what to expect when your tax bill comes around.
Relocating can be expensive. Between plane tickets and apartment deposits, getting your money to your new country is essential for setting up your new life.
In this section, we look at the different types of banks in Hong Kong and the accounts they offer. You’ll need a Hong Kong ID to open an account so make sure you bring enough cash to tide you over until your ID card application has been processed.
As well as bank accounts and payment methods, we’ll look at what to expect from the Hong Kong tax system. 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
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 about 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
Telephone banking and online banking are readily available at most Hong Kong banks; they are usually free of charge. Lots of telephone services operate 24 hours a day, 7 days a week. You can also use online and telephone banking to pay utility bills or government fines. Mobile banking services are becoming more and more popular, too – just ask your bank of choice for further details.
Moreover, you can sign up with the local PPS 24-hour service to pay your bills by 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. This is the main reason why lots of expats start using checks while living in Hong Kong.
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.
ATMs are located all over the city. Often, they can be used for more than just withdrawing cash, for example, for paying bills and 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.
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.
Opening a Bank Account
The specific criteria you have to fulfill for opening a bank account in Hong Kong vary from bank to bank. Usually, the documentsneeded to open a savings account or current account include the following:
- 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!)
- a completed application form
The fee for a Hong Kong bank account generally depends on the type of account you hold, as well as your regular income or the average balance you have in your account. Some accounts might require minimum deposits.
Once you open a savings account or current account at a Hong Kong bank, you will receive a debit card. You can use the debit card to withdraw money from your bank network’s ATMs, as well as for shopping in Hong Kong’s supermarkets and department stores.
You should not have any trouble getting a credit card from any bank in Hong Kong. However, there might be different requirements regarding your credentials and annual salary for various types of cards and credit limits.
Generally speaking, you need to provide the following information when applying for a credit card:
- your Hong Kong Identity Card or your passport
- proof of address in Hong Kong
- proof of salary or your salary statements from the last several months
For more information on using debit cards and credit cards, please check our guide on payment methods in Hong Kong.
What is the tax in Hong Kong?
When it comes to living in Hong Kong, income tax is a topic that expats will not be able to avoid. There may be rumors that there is no Hong Kong income tax at all, but unfortunately, we have to tell you that this is not true: Contrary to other popular expat destinations, especially in the Middle East, there is indeed such as a thing as taxing your income in Hong Kong. Nevertheless, rates for the Hong Kong income tax are fairly low and concepts such as sales, capital gains, and value-added tax are (mostly) unheard of.
The local salaries tax, which applies to foreign and local residents alike, has rates rising progressively for higher incomes. Most expats, however, may shake their head in disbelief once they see the modest maximum rate. Rental incomes and profits from self-employment are also subject to taxation. But there are still a number of allowances and deductions you can claim.
It is no surprise then, that Hong Kong is a popular place for expats wishing to escape their tax burden. In this article, we’ll give you a brief run-through concerning Hong Kong income tax, allowances, and tax returns.
As an expat with a long-term Hong Kong visa, you are required to pay Hong Kong income tax, just like every other fiscal resident. We are now going to briefly explain how the tax system works. By no means, however, does the following information constitute any legal advice. For more detailed questions on taxation in Hong Kong, contact the Inland Revenue Department (IRD). We’d also recommend you talk to a trustworthy tax advisor for advice on your individual situation.
First of all, your income is taxed according to the territorial principle: Only what you earn or what accrues in Hong Kong is subject to Hong Kong income tax as well. 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 his or her income in other countries and thus would have to tax the same income twice.
The largest chunk of your Hong Kong income tax burden will probably be your salaries tax. 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, and end-of-contract gratuities. 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.
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”. If you fill in your details, the calculator gives you your taxes based on the actual Hong Kong rates of your selected year of assessment.
Other Kinds of Income Taxation
In addition to your salaries tax, there are two more kinds of Hong Kong income tax which might add to your tax burden. First, 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.
Second, any income from self-employment is taxable, too. 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. For details, please refer to this government website on self-employment and taxation.
Hong Kong’s income tax does not include any taxes on interests, dividends, or royalties. There is nocapital gains tax in Hong Kong, either. The only case in which you have to pay taxes on capital gains is, as mentioned above, if shares or options are part of your regular remuneration. These are subject to the same Hong Kong income tax as normal salaries.