Complete Guide to Tax and Tax Loans in Hong Kong
First time paying tax and not sure how to do so? Wants to apply for a tax extension?Did you know there are ways to earn rebates when paying tax? This Complete Guide on Tax by MoneySmart covers everything that you need to know.
(Click here to read the Chinese version 點擊此處閱讀中文版 交稅攻略)
What is eTax?
Since 2000, the Inland Revenue Department introduced online tax filing services with aims to provide tailored services for taxpayers, including filing taxes, calculating taxes, getting electronic tax bills, paying taxes, viewing tax forms online, checking their personal tax records, and getting in touch with the tax department.
To access the above mentioned service, it is required to apply for an eTax password using your ID card number and tax file number (apply on the eTax password application website). You will receive an activation password to your registered address within two days. Check out the Tax loan products!
Why do we need to pay tax?
Tax is used to help funding government spending on public services such as medical, education, housing and the welfare system, etc.
When do we need to pay tax?
| Month | What to expect? | |
|---|---|---|
| MonthMay- June | What to expect? Individuals Tax Returns for 2019/2020 issued | |
| MonthJune- July | What to expect? Return the Tax Return within 1 month from the date of issue on or before 2 July 2020 | |
| MonthOctober | What to expect? Notice of Assessment issued | |
| MonthJan next year | What to expect? 1st tax payment | |
| MonthApril next year | What to expect? 2nd tax payment |
Compare Tax Loans in Hong Kong
How can I pay tax in Hong Kong?
| Payment Method | Details | |
|---|---|---|
| Payment Method Credit Card | Details Pay your tax bill through online banking or mobile apps by credit cards. Some credit cards even offer rebates for tax payment. | |
| Payment Method FPS | Details Pay your tax bill through a mobile banking app or e-wallet that supports Government FPS bill payments simply by scanning the QR code on the IRD bills. | |
| Payment Method PPS | Details Pay your tax bill through the PPS hotline at 18031, online or “PPS on Mobile”. The merchant code for IRD is “10”. | |
| Payment Method ATM | Details Pay at any ATM with the “Bill Payment” signage or the “JET PAYMENT” logo and pay by selecting the “Bill Payment” function and enter your account number and payment amount. | |
| Payment Method Online Banking | Details Login to your online banking, select bill payment and enter payment amount. | |
| Payment Method e-Cheque / e-Cashier Order | Details Visit the “Pay e-Cheque” portal government website, select Inland Revenue Department and the relevant bill type, enter the bill information and then upload e-Cheque in order to make payment. | |
| Payment Method Post | Details Cheque needs to be crossed and made payable to “The Government of the Hong Kong Special Administrative Region” or “The Government of the HKSAR”. | |
| Payment Method Convenience Stores | Details Present the barcode on the IRD bills at any 7-Eleven Convenience Store, Circle K Convenience Store, VanGO Convenience Store and China Resources Vanguard Supermarket in Hong Kong and make bill payments. Please note that you can only make payments up to HK$5,000 per transaction. |
Can I pay tax by credit card?
Tax payment can be made by credit cards. Some banks like HSBC, Hang Seng, Citibank, etc usually offer attractive cashbacks/ miles when you make tax payments using designated credit cards. If you want to get the most of these offers, please stay tuned to MoneySmart’s website. We will provide you with the latest information to save you time and money!
How Salaries Tax is computed in Hong Kong?
| Net chargeable income | Rate | Tax | |
|---|---|---|---|
| On the First | Net chargeable income HK$50,000 | Rate2% | TaxHK$1,000 |
| On the Next | Net chargeable income HK$50,000 | Rate6% | TaxHK$3,000 |
| Net chargeable income HK100,000 | TaxHK$4,000 | ||
| On the Next | Net chargeable income HK$50,000 | Rate10% | TaxHK$5,000 |
| Net chargeable income HK$150,000 | TaxHK$9,000 | ||
| On the Next | Net chargeable income HK$50,000 | Rate14% | TaxHK$7,000 |
| Net chargeable income HK$200,000 | TaxHK$16,000 | ||
| Remainder | Net chargeable income | Rate17% | Tax |
Who has to pay tax? Do expats need to pay tax in Hong Kong?
An employee is subject to salaries tax if his or her salary is sourced in Hong Kong, even for non-residents or non-permanent residents.
What can I do if I do not have enough money to pay tax?
If you do not have enough money to pay tax, you can apply for tax loan or tax relief to reduce the immediate tax burden. Tax loan refers to loans offered by banks or lending companies to help tax payers to pay tax. However, there is actually no limit on how to utilize the tax loan borrowed. Some people use them for purposes such as weddings and home renovation.
How to apply for tax extension?
You need to apply in writing. Taxpayer is required to download and complete the relevant parts of the Form IR1121 and send it to the Inland Revenue Department by post. You can apply for tax relief on one of the following grounds:
- Entitled to a new allowance
- Your net chargeable income is likely to be less than 90% of the net chargeable income for the preceding year
- You have assessed to provisional salary tax and have paid or are likely to pay for tax-deductible expenses
- You have ceased to derive income chargeable to salaries tax
- You have objected to your salaries tax assessment
Difference between tax loan and personal loan
| Tax Loan | Personal Loan | |
|---|---|---|
| Application Period | Tax Loan Between October to April next year | Personal Loan 365 days a year |
| Repayment Period | Tax Loan 12 months | Personal Loan Up to 72 months |
| Interest Rate | Tax Loan Lower than P Loan | Personal Loan Higher than Tax Loan |
| Loan Amount | Tax Loan 10-12x monthly salary | Personal Loan 18-20x monthly salary |
Things you should know about Tax Loans in Hong Kong
1. APR
2. Terms and Conditions
3. Promotion Period
4. Interest Rate will be Affected by Credit Rating
5. Tax Loan is not only for Tax Payment
6. New Customers Offers/ Online Offers
Tax and Tax Loan FAQ
What happens if I miss the tax deadline?
- If you fail to pay your tax on time, the Commissioner of Inland Revenue has the right to initiate recovery actions which include imposing a 5% surcharge on the entire balance of the demand notice, taking legal action, etc.
What is the interest rate of a tax loan?
- The tax loan interest is usually lower than personal loans. For example, Citi Tax Season Loan offers as low as 1.78% APR.
What is a tax loan?
- A Tax loan is a loan used to pay income tax bills and reduce the impact of penalties as a result of late or non-payment of tax bills.
When is the tax loan launched?
- Tax loan is usually launched between October- April next year. If you don’t want to miss these offers, please stay tuned to MoneySmart’s website.
What is eTax?
- It is an online platform by the Inland Revenue Department that provides tailored services for taxpayers e.g. filing taxes, calculating taxes, getting electronic tax bills, etc.
