How is the property tax rate in Hong Kong calculated? And how does it compare to similar economies in the region? This is done with a combination of a lower rate, and more possible exclusions for taxpayers.

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property taxes in Hong Kong

Introduction 

Every country and territory in the world imposes tax rates at levels it deems to be suitable for the people who live and pay taxes there. This is the primary reason why tax rates around the world differ. These different rates do not only apply to one’s own income. Corporate, withholding, and capital gains are some of the other taxes which are imposed at different rates.  

The value of property tax will also differ depending on where the property in question is to be taxed. Therefore, ownership of property in certain locations is more costly than the same in others because those locations impose property tax at a higher rate. 

When one analyses the property tax rates of Hong Kong today, one will find that the rates imposed are not more expensive than other countries of the Asia-Pacific region. In fact, they tend to be lower than their regional counterparts. This is because companies and individual taxpayers of Hong Kong benefit from some of the lowest tax rates in the world. This fact holds true for all manner of taxes, whether personal income tax, corporate income tax, or property tax.  

There are certain circumstances in play which permit the government of Hong Kong to impose relatively low property tax rates on those who are to pay it. However, the most notable of these is the government of Hong Kong can draw upon its vast financial reserves.  

The value of these reserves is equivalent to approximately 12 months of government expenditure. Furthermore, the government of Hong Kong also receives interest on these reserves. In this way, the Hong Kong government can generate additional revenue. 

 

Property Tax in Hong Kong  

In Hong Kong, property tax is charged at a rate of 15% of the net assessable value of the property in question; however, the true figure is lower than one might assume because a property’s net assessable value is its value after the deduction of any rates paid by the owner of the property, a government-mandated allowance to be used for repairs and outgoings which is equivalent to 20% of its assessable value, and any irrecoverable rent.  

 

Regional Comparison 

There are several notable examples in the region of countries which impose higher tax rates on property as well as income derived from the renting of property to tenants. 

 

Taiwan 

In comparison, the same form of taxation in Taiwan is imposed at a 20% rate. On top of this, there is also an additional 5% tax charge imposed there; this is the Value Added Tax (VAT).  

 

South Korea 

In South Korea, only major expenses are to be deducted from the tax imposed on income generated from the renting of the property. Furthermore, as is the case with Taiwan, South Korea adds VAT to the amount to be taxed.  

Australia 

In Australia, those who pay land tax may benefit from several exemptions; however, the basis for the amount to be paid is the assessed value of the property instead of the net assessed value. Thus, it has been proven that property tax is Hong Kong is not more expansive than the same tax in other countries of the Asia-Pacific region. 

Although tax rates in Hong Kong are lenient and favourable, it is complicated, and experience is required to properly navigate the taxation system to ensure a favourable outcome. We at Paul Hype Page & Co will be of service for any of your tax needs. We have a team of knowledgeable and experienced experts who understand the various aspects of taxation in Hong Kong. Thus, we will enable you to save a significant amount of money which otherwise would have been spent on taxation through genuine and legitimate means.