Are dividends taxed in Hong Kong?
No, not in the hands of the recipient in the normal case. Hong Kong has no withholding tax on dividends, and a dividend from a company that is itself subject to Hong Kong profits tax is excluded from the recipient's assessable profits. Foreign-sourced dividends of multinational group members can be taxable under the FSIE rules.
Paid by a Hong Kong company: there is no dividend withholding tax, so the company pays the dividend gross. An individual shareholder does not pay salaries tax or profits tax on it. The company's profits were already taxed (or exempt) at company level.
Received by a Hong Kong company: a dividend from a corporation that is subject to Hong Kong profits tax is excluded from the recipient's assessable profits.
Foreign dividends: a dividend arising outside Hong Kong is normally treated as offshore and not taxable. The exception is the FSIE regime, which can tax foreign-sourced dividends received in Hong Kong by a member of a multinational enterprise group (a group with at least one entity or permanent establishment outside the parent's jurisdiction). Relief applies if the entity meets the economic substance requirement or the participation exemption.
Not the same as salary: the IRD looks at substance. If a payment is really remuneration for work done as a director or employee, it is taxed as salaries tax income no matter what it is called. Dividends must also be lawfully declared out of distributable profits under company law.
Check the position in the shareholder's own country: Hong Kong's treatment does not bind other tax authorities.
Legal basis
- Inland Revenue Ordinance (Cap. 112), s.26(a)
- Inland Revenue Ordinance (Cap. 112), ss.15H–15M (FSIE)
Sources
Applies to YA 2025/26 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What is Hong Kong's territorial source principle of taxation?Hong Kong charges profits tax only on profits that arise in or are derived from Hong Kong from a trade, profession or business carried on here. Profits that have a source outside Hong Kong are not chargeable. Where the source lies is a question of fact, decided case by case.
- Does a Hong Kong company pay tax on profits earned overseas?Generally no. Profits sourced outside Hong Kong are outside the profits tax charge, even if the company is incorporated here. The exceptions are certain foreign-sourced passive income received in Hong Kong by members of multinational groups under the FSIE regime, and any profits the IRD finds are actually sourced in Hong Kong.
- Does Hong Kong have VAT, GST or sales tax?No. Hong Kong has no value-added tax, goods and services tax or sales tax. The only taxes on income are profits tax, salaries tax and property tax, plus duties such as stamp duty. The government also confirms there is no capital gains tax and no withholding tax on dividends or interest.
- What is the profits tax rate for a Hong Kong company?Under the two-tiered system, a corporation pays 8.25% on its first HK$2 million of assessable profits and 16.5% on the rest. The lower rate is available to only one entity in a group of connected entities. This applies from year of assessment 2018/19 onwards.
- What profits tax rate do sole proprietors and partnerships pay in Hong Kong?Unincorporated businesses pay 7.5% on the first HK$2 million of assessable profits and 15% on the remainder, from year of assessment 2018/19. This is the two-tiered system. As with companies, only one entity in a group of connected entities can use the lower rate.