How is a director's salary or fee taxed in Hong Kong?
Directors' salaries, fees, bonuses and similar pay for an office or employment in Hong Kong are charged to salaries tax. Tax is the lower of progressive rates (2% to 17%) on net chargeable income and the standard rate on net income (15% on the first HK$5 million, 16% above) for 2025/26.
Salaries tax is charged on income arising in or derived from an office or employment in Hong Kong, including salary, fees, bonuses, and benefits in kind. A director holds an office, so director's fees are included, as are directors who also work as employees.
How the tax is computed
- Take total assessable income (salary, bonus, fees, plus the taxable value of housing or other benefits).
- Subtract allowable deductions (such as qualifying MPF contributions, charitable donations, home loan interest, domestic rent, and so on).
- Subtract personal allowances to get net chargeable income.
- Tax is the lower of:
- progressive rates on net chargeable income, or
- the standard rate on net income before allowances.
Tax return and employer reporting. The company reports the director's pay on Form IR56B within the employer's return. The individual files a Tax Return for Individuals (BIR60). Salaries tax is first charged provisionally and then adjusted.
Reductions for 2025/26. The one-off 100% reduction of final salaries tax, capped at HK$3,000 per person (or per jointly assessed couple), applies for 2025/26.
Overseas directors. Under the IRD's practice note, director's fees are taxable in Hong Kong if the company's central management and control is exercised here, wherever the director lives or works. Fees of a director of a company managed from elsewhere depend on where that office is located; get specific advice.
Legal basis
- Inland Revenue Ordinance (Cap. 112), s.8(1)
- Inland Revenue Ordinance (Cap. 112), s.9(1)(a)
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.
- 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.
- 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.