Recurring taxation

Profits tax

Profits from a business conducted by a property owner in Hong Kong is subject to profits tax. The profits tax rate is 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000. This includes running a business of letting real properties. Nevertheless, the amount of property tax paid may be set off against the profits tax payable.

Property tax

Property tax is payable if the land owner lets his/her property and collects rent. The amount payable is 15% of the Net Assessable Value. The Net Assessable Value is calculated by taking the rental income less irrecoverable rent, rates paid by the owner(s) and 20% statutory allowance for repairs and outgoings.

Other costs

Property owners must pay government rent, which cannot be offset. Typically, government rent is 3% of the property's rateable value.

Property owners are also subject to the payment of rates quarterly in advance. The percentage charge of rates is determined by the legislature and currently, rates is 5% of the property's rateable value. Owners may offset the payment of rates against the payment of property tax.

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