Tax Residency in Hong Kong

Tax residency is a crucial factor that determines an individual's tax obligations in a specific jurisdiction. In Hong Kong, the criteria for tax residency, the number of days spent in the territory, and international considerations play a significant role in determining an individual's tax liability.

Criteria for Tax Residency

In Hong Kong, an individual is considered a tax resident if they have a "substantial connection" to the city. This connection is established by assessing various factors, including the duration of stay, employment, family ties, and business interests.

Are considered tax resident in Hong Kong, the following individuals:

Individual who ordinarily resides in Hong Kong;

Number of Days in Hong Kong: The number of days an individual spends in Hong Kong is a key factor in determining tax residency. Generally, Individual who stays in Hong Kong for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment one of which is the relevant year of assessment.

When we talk about of year of assessment, we mean a fiscal year in Hong Kong that goes from the 1st of April to the 31st March of the following year.

Company / partnership / trust / body of persons incorporated or constituted in Hong Kong;
Company / partnership / trust / body of persons incorporated or constituted outside Hong Kong but managed or controlled in Hong Kong.

Cross-Border Employment and Dual Residency

Individuals who are residents of another country and work in both Hong Kong and that country need to consider double taxation avoidance agreements (DTAs) that Hong Kong has with various jurisdictions. These agreements aim to prevent the same income from being taxed twice. It's crucial to review the DTA between the two countries to determine tax liabilities and potential tax credits.

Individuals who are residents of another country and pay taxes in Hong Kong may be eligible to claim a foreign tax credit in their home country. This credit is usually applied to avoid double taxation. However, the specifics of claiming tax credits vary from country to country, so it's essential to seek advice from tax professionals.

Compliance and Professional Advice

Understanding tax residency rules and their implications can be complex, especially when dealing with cross-border employment and taxation. Seeking advice from tax professionals and staying informed about relevant tax treaties and regulations is crucial to ensure compliance and minimize tax liabilities.

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