Hong Kong Salaries Tax – Basis Period

Salaries Tax is charged on the assessable income earned by an employee or an office holder in a year of assessment that runs from 1 April to 31 March of the following year.

A final assessment will not normally be made before the end of the year of assessment (save the taxpayer is about to leave Hong Kong). Instead, a provisional assessment is made based on the last final assessment. The tax demanded by the provisional assessment is to be paid by two installments: 75% in January to March within the year of assessment and 25% in the coming April to June. In other words, tax is payable on the earned provisional income.

Remark: If the actual income is 90% of the provisional income or less, the taxpayer can ask for a revised assessment of provisional income. The time limit for such application is 28 days before the pay day of the provisional tax.


When the final assessment is raised, the provisional tax charged will be deducted from the tax payable for that year.

Normally, in the year of assessment with a commencement of employment, the first tax payable will be a final assessment without a deduction for provisional tax plus a provisional tax for the following year of assessment.

For illustration showing how to compute salaries tax, press here.

If you want to use the Revenue¡¦s program to compute salaries tax, you can go to the IRD’s home page. Then, click “English”, “Electronic Services”, “Salaries Tax Computation”.

Remark: A taxpayer may receive a lump sum payment on termination of employment. Besides, he may receive a lump sum payment which is a deferred pay or arrear of pay. In these two cases, he can apply for relating back the lump sum payment over the period to which the payment relates. The maximum period of relating back is 3 years. The purpose of relating back is to spread the lump sum over 2 to 4 years of assessments to avoid the sudden increase of marginal tax rate in the year of the lump sum payment.