Hong Kong Salaries Tax for Founders: How to Report Income, Allowances and Deductions

For context on Profits Tax side of the founder equation, see our First Profits Tax Return in Hong Kong guide and the Hong Kong annual compliance timetable.

Founder tools: Run a quick first-pass review with our Hong Kong tax calculator and the HK compliance checklist before lodging the BIR60.

Who has to file a Hong Kong Salaries Tax return?

You generally need to file a Salaries Tax return (BIR60) if you have Hong Kong-sourced income from employment, a Hong Kong directorship or a pension. The IRD's Salaries Tax — What you need to know as an Employee page lists the chargeability triggers (office, employment, pension) and points you to the BIR60, allowances and deductions guidance. If you only have Profits Tax and no Hong Kong employment income, you may not need to file a BIR60 at all — but review the rules with an adviser before assuming so.

Per the IRD's Individuals landing page, separate personal-tax obligations exist for employees (including directors and pensioners), sole proprietors or partners, property owners, and non-resident individuals rendering services in Hong Kong. Each category has different forms, allowances and record-keeping rules, so confirm which one applies to your facts before completing the BIR60.

Is founder-director remuneration chargeable to Salaries Tax?

Yes. Salary, fees, bonuses, commissions and any director's remuneration paid for holding an office in a Hong Kong company are chargeable to Salaries Tax. Founder-directors therefore have a personal Salaries Tax side to every dividend-versus-salary decision, sitting alongside the company's Profits Tax position. Plan director pay and company profit extraction together, not separately.

The IRD's Salaries Tax guidance treats a director's fee as chargeable income even where the director physically sits outside Hong Kong, subject to specific cross-border facts. Combined with the company's Profits Tax rules (see First Profits Tax Return in Hong Kong), this is why many founder-directors benchmark both salaries tax and profits tax together when designing extraction. The offshore vs onshore comparison provides context for how a Hong Kong company can be Profits Tax–favourable while the director still owes personal Salaries Tax on director's fees.

How is Hong Kong Salaries Tax calculated?

Salaries Tax is calculated at progressive rates on net chargeable income (income minus deductions minus allowances) or at the standard rate on net income (before allowances), whichever is lower. From 2024/25 a two-tier standard rate applies: 15% on the first HK$5,000,000 of net income and 16% on the remainder. Tax payable is then reduced by any tax reduction announced in the Budget.

The current IRD PAM 61(e) — Allowances, Deductions and Tax Rate Table (August 2026) sets out the progressive-rate bands (2% / 6% / 10% / 14% / 17%) and the two-tier standard rates (15% / 16%) together with the most recent tax reduction schedule. The progressive rates have been stable for some years, while the standard rate moved from a flat 15% to the two-tier structure starting in 2024/25 — confirm which schedule applies to the year of assessment you are filing.

What are the main Salaries Tax allowances for 2026/27?

From 2026/27 the IRD's PAM 61(e) pamphlet confirms the Basic Allowance rises to HK$145,000, with parallel increases to Married Person's Allowance (HK$290,000), Single Parent Allowance (HK$145,000) and Child Allowance (HK$140,000 per child, with an additional HK$140,000 in each of the first two years following childbirth). Other allowances (Dependent Parent/Grandparent, Personal Disability Allowance, Disabled Dependant Allowance) remain on the pre-2026/25 schedule.

Allowance figures reproduced from PAM 61(e) (August 2026). Marriage-, parenthood- and disability-related allowances depend on the facts of the year of assessment and on the taxpayer's eligibility in that year. Confirm the schedule that applies to the year you are filing before relying on these numbers.

What are the main Salaries Tax deductions for 2026/27?

Deductions reduce income chargeable to tax before allowances. The main items are MPF or Recognized Retirement Scheme contributions (HK$18,000 cap), home loan interest (HK$100,000 basic plus HK$20,000 additional from 2024/25), qualifying Voluntary Health Insurance Scheme (VHIS) premiums (HK$8,000 per insured person), qualifying annuity premiums and Tax Deductible MPF Voluntary Contributions (HK$60,000 combined), domestic rents (HK$100,000 basic plus HK$20,000 additional from 2024/25), self-education expenses (HK$100,000), elderly residential care expenses (HK$110,000 from 2026/27), approved charitable donations (35% of assessable income after allowable expenses and depreciation) and Assisted Reproductive service expenses (HK$100,000 cap from 2024/25).

Each deduction has its own qualifying conditions. For example, MPF contributions only count up to the statutory HK$18,000 cap regardless of how much the employer and employee actually paid, and home loan interest deduction is normally limited to one property and a fixed period. The full schedule and conditions are in the IRD's PAM 61(e) pamphlet and the Salaries Tax overview. Cross-reference the figures with the year of assessment you are filing, as the home-loan, domestic-rent and AR-expense deductions were all expanded from 2024/25.

Should I use the progressive rate or the two-tier standard rate?

Use whichever gives the lower figure. The IRD assesses both methods automatically, so the taxpayer usually does not need to elect between them. As a practical check: progressive rates often win at lower incomes and where allowances are significant; the two-tier standard rate (15% / 16%) often wins for high earners without large allowances, especially once net income passes HK$5,000,000. Run both using the IRD's 2026/27 Salaries Tax computation page to confirm.

The IRD's per-year-of-assessment tax computation pages are the simplest way to verify the rate that applies to your case. The page for 2026/27 contains the official computation form. The pages for 2025/26 and 2024/25 are still useful for older filings.

How do I file and pay Salaries Tax in Hong Kong?

Most individual taxpayers now file Salaries Tax returns online through the IRD's eTAX Individual Tax Portal (ITP), with electronic storage of supporting documents and electronic tax payment. Paper BIR60 returns are still available where the IRD issues them, but electronic filing is the default for new and existing individual filers. Confirm your filing channel from the BIR60 cover, lodge before the issue-date deadline and keep digital copies of all supporting evidence.

For practical first-pass preparation, use our Hong Kong tax calculator to model both the progressive-rate and two-tier-standard-rate outcomes before lodging the BIR60. The IRD's Salaries Tax page and Individuals portal index remain the official anchors, while HK compliance checklist reminds a founder when Salaries Tax sits alongside Profits Tax, Annual Return and business registration renewal.

How does a founder choose between Salaries Tax extraction and dividends?

For a founder-director of a Hong Kong private company, the practical decision is how much to extract as director's fees (Salaries Tax) versus dividends (which are not subject to Hong Kong withholding tax and not currently charged to Salaries Tax). Both sides of the comparison must hold up: the company must be able to justify the salary as an allowable deduction for Profits Tax, and the founder must accept that director's fees are personal Salaries Tax income. Modelling both tax outcomes together avoids the common mistake of optimising Profits Tax in isolation.

For a fuller discussion of how Hong Kong Profits Tax interacts with founder-director remuneration, see our First Profits Tax Return in Hong Kong guide and the comparison of offshore vs onshore company structures. If you are weighing outsourcing compliance, the Osome vs Sleek vs Statrys comparison and the GetStarted.hk vs Osome comparison provide fit-based guidance; cross-reference these with the TCSP licensing guide to make sure the chosen service provider is properly licensed.

Frequently asked questions

Related Hong Kong founder guides

For context, see the First Profits Tax Return in Hong Kong guide, the Hong Kong annual compliance timetable, and the offshore vs onshore structures comparison. For founder-directors deciding between salary and dividend extraction, also review the Osome vs Sleek vs Statrys and GetStarted.hk vs Osome provider comparisons.