Hong Kong specific
Kirsten Simmons avatar
Written by Kirsten Simmons
Updated over a week ago

TFX specializes in top-tier U.S. tax services for individuals, partnerships, corporations, trusts, and estates worldwide. If you need assistance with your Hong Kong tax return, we have got you covered. We maintain strong partnerships with trusted local tax experts in 193 countries. These professionals are well-equipped to handle your non-U.S. tax needs. Reach out to us via phone, chat, or email, and we will connect you with an experienced local firm. Your global tax compliance just got simpler with TFX.

Table of contents:

Hong Kong businesses and pension

Opening a local business in Hong Kong as a U.S. 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:

  1. Entry for Investment.

  2. Capital Investment Entrant Scheme (CIES).

  3. Dependent Visa.

If you need assistance with the visa application process, some business immigration consultancies in Hong Kong can help you.

Types of local business structures in Hong Kong and the U.S. filing requirement

  • Sole Proprietorship

    As a Sole Proprietor, you are self-employed. You must report your self-employment to the IRS via form Schedule C (included in our PREMIUM package).

  • 無限公司 (Partnership)

    Expats planning to go into business with one or more people may decide to register their business as a partnership. You must 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 must report the LLC to the IRS via Form 5471.

  • 有限公司 (Corporation)

    You must report the Corporation to the IRS via Form 5471.

Social Security and pensions

Pension in Hong Kong as a U.S. citizen

Hong Kong public policy views the Hong Kong pension system as a “three-pillar system". Hong Kong has a contribution-based private system, 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 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 must contribute 5% of your monthly income, but at a maximum of HKD 1,250 each, to an MPF scheme of your choice. You will have to contribute to an MPF scheme even if you own a 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.

  • A mandatory Provident Fund (MPF) is a pension, not social security, not social security.

  • MPF must be reported on FBAR & FATCA.

Social Security Assistance (SSA)

Under Hong Kong’s system, low-income individuals above the pension age may be eligible for certain taxpayer-funded benefits. Under SSA schemes, the Government tops up your pension if your income and 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.

Hong Kong income reporting

Income chargeable to salaries tax

To report the total amount of the annual gross salary in the Tax Questionnaire:

  1. Click the Configure Life & Income button on the left side.

  2. Click Yes next to I receive payments from an employer.

  3. Click Next Step and Submit.

  4. On Income > Wages click Yes to the question Did you receive payments during the tax year from a non-U.S. Employer?

  5. Enter the gross salary amount to the question Gross wages/salary earned with this employer during the tax year? Use the income calculator to convert to a calendar year.

Social Security

There are no social security/social insurance taxes in Hong Kong.

Mandatory Provident Fund

Hong Kong requires a Mandatory Provident Fund that provides the basic framework for privately managed funds to accumulate benefits for Hong Kong workers at retirement. To report your contributions to the MPF in the Tax Questionnaire, navigate to Income > Wages > Did you receive payments during the tax year from a non-U.S. Employer? > Were contributions made to a non-U.S. pension plan (whether yourself or by your employer)? > Did your employer contribute to your pension plan?

Property tax

Contrary to the name, this is where income from rental property is reported. To report your rental income and associated expenses in the Tax Questionnaire:

  1. Navigate to Income > Passive Income.

  2. Click Yes under the statement I rent out property.

  3. Navigate to the Rental Income tab on top and scroll down to the question Amount of gross rent received during the tax year.

  4. Click Yes under the question Did you pay non-U.S. tax on rental income?

  5. Provide the details.

Profits tax

The section relates to income from self-employment. To report it, navigate to Income > Self-employment tab and enter the amount under the question Gross Income from the Self-employment.

Salary tax computation

This amount represents the total tax assessed on your taxable income. To report tax imposed on the particular income type, navigate to Taxes And Deductions > Taxes Paid, and click Yes to the question Did you pay any tax to any non-U.S. country on any of your income this year?

Hong Kong financial accounts reporting

Which Hong Kong financial accounts must the U.S. individual report on FBAR / FATCA?

  • Individual bank accounts include 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, such as whole life insurance policies.

  • Business accounts where a U.S. person has a greater than 50 percent interest in the entity.

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