Hong Kong Specific
- FBAR Only TQ - Does not ask income information
- HK Business & Pension
- Opening a local business in Hong Kong as a US citizen
- What types of local business structures are there in Hong Kong, and what would be the US filing requirement?
- Your pension in Hong Kong as a US citizen
- Mandatory Provident Fund Schemes (MFP)
- Social Security Assistance (SSA)
- HK Income Reporting
- Income Chargeable to Salaries Tax
- Social Security
- Mandatory Provident Fund
- Property Tax
- Profits Tax
- Salary Tax Computation
- HK Financial Accounts
FBAR Only TQ - Does not ask income information
An FBAR (FinCEN 114) is a report sent to the US Treasury informing them of non-US financial accounts. To provide information for an FBAR, we ask that you answer YES to I have financial accounts outside the U.S. during TQ creation, or by clicking Select my income types after the TQ is created.
For the years in which you may not need to file a tax return, but need to file an FBAR we created an FBAR only TQ. This is commonly needed during the streamlined procedure program, for the 3 older years. The FBAR only TQ includes fewer questions than a regular TQ and is not sufficient if you are in need of a tax return for this year.
For this shortened TQ, we do not need your income information. We need:
- The Basics - basic information about yourself and your family
- Where I live - information regarding your place of residence
- Non-US Financial accounts - your non-US financial information for FBAR processing.
To create an FBAR Only TQ, click the gear icon at the left, then switch on Fbar Only toggle.
If you want to have the FBAR prepared now and is going to provide tax return information later, please notify your accountant. If you need to file a return for the year in question, you can revert to a full TQ income question & more. Click the gear icon at the left, then switch off Fbar Only toggle.
HK Business & Pension
Opening a local business in Hong Kong as a US citizen
The circumstances in which you find yourself living or working in Hong Kong will impact the type of visa you require to start your own business. The types of visas you may select from include, but are not limited to:
- Entry for Investment
- Capital Investment Entrant Scheme (CIES)
- Dependent Visa
If you need assistance with the visa application process there are business immigration consultancies in Hong Kong that can help you.
What types of local business structures are there in Hong Kong, and what would be the US filing requirement?
As a Sole Proprietor, you are self-employed. You will need to report your self-employment to the IRS via form Schedule C.
Expats planning to go into business with one or more people may decide to register their business as a partnership. You will be required to report the partnership to the IRS via Form 8865.
Limited Liability Company (LLC)
The most common business structure used when starting a business in Hong Kong is a limited liability company (LLC). Limited companies must register with the Companies Registry in Queensway, where the necessary registration paperwork can be completed. A certificate of incorporation will be issued once the incorporation form has been approved. You will be required to report the LLC to the IRS via Form 5471.
You will be required to report the Corporation to the IRS via Form 5471.
Your pension in Hong Kong as a US citizen
The Hong Kong pension system is viewed by Hong Kong public policy as a “three-pillar system”.
Hong Kong has a contribution-based private system, which is supplemented by means-tested old-age benefits paid by the Government. However, the private system is divided into two pillars: mandatory and voluntary contributions.
Employees may choose to make voluntary contributions by issuing a written notice to their employer.
Mandatory Provident Fund Schemes (MPFs)
The Mandatory Provident Fund Schemes require mandatory contributions to the MPF scheme from both the Hong Kong employer and the Hong Kong employee. Self-employed individuals are also required to contribute to an MPF scheme.
MPFs are mandatory, fully funded and privately managed contribution schemes. You and your employer both have to contribute 5% of your monthly income, but at maximum HKD 1,250 each, to an MPF scheme of your choice. You will have to contribute to an MPF scheme even if you have your own business in Hong Kong. There are three different types of MPFs:
- Master Trust schemes are the most common schemes.
- Employer-Sponsored schemes are exclusive to the employees of a company.
- Industry schemes focus on workers in sectors such as catering and construction.
- Mandatory Provident Fund (MPF) is a pension, not social security, not social security.
- MPF must be reported on FBAR & FATCA (8938)
Social Security Assistance (SSA)
Under Hong Kong’s system, low-income individuals above pension age may be eligible for certain taxpayer-funded benefits. Under SSA schemes, the Government tops up your pension if your income and your assets do not exceed a specified amount.
Expatriates are unlikely to qualify for SSA benefits unless they intend to reside in Hong Kong for at least seven years.
HK Income Reporting
Income Chargeable to Salaries Tax
Gross Salary - Report the total amount of the annual Gross Salary in Income > Wages > Income Outside of the U.S. section of our Tax Questionnaire.
There are no social security/social insurance taxes in Hong Kong.
Mandatory Provident Fund
Hong Kong Social Security - HK requires Mandatory Provident Fund that provides the basic framework for privately managed funds to accumulate benefits for Hong Kong workers at retirement. Your own contributions to the MPF should be reported in the Tax Questionnaire under the Income > Wages > Income Outside of the U.S. tab.
Contrary to the name, this is where income from Rental Property is reported. Report your rental income and associated expenses in the Tax Questionnaire under the Income > Passive Income > Rental Income tab.
The section relates to income from Self-Employment Income. Report in the Tax Questionnaire under the Income > Self-Employment tab.
Salary Tax Computation
This amount represents the total tax assessed on your taxable income. Report this tax in the Taxes & Deductions > Taxes Paid section of the Tax Questionnaire (TQ).
As stated below, the TQ offers two options, one to use tax assessed for the foreign tax credit, or simply use the amount for tax actually paid. While in the TQ, please click the corresponding help link (green question-mark) for further detail.
HK Financial Accounts
Which types of Hong Kong financial accounts the U.S. individual must report on FBAR / FATCA?
- Individual bank accounts such as savings accounts, checking accounts, and time deposits.
- Retirement accounts - balance on Pillar 2 and Pillar 3 accounts
- Brokerage accounts, commodity futures or options accounts,
- Insurance policies and annuity contracts with a cash value (i.e. such as a whole life insurance policy).
- Business accounts where U.S person has a greater than 50 percent interest in the entity