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CFP Hong Kong study materials
CFP Hong Kong study resources

CFP Hong Kong: Tax Planning

CFP Hong Kong · Work through your exam, one topic at a time.

All guide sections

Tax Planning

This domain tests Hong Kong's territorial tax system and lawful planning. You must compute salaries tax, identify deductions and allowances, and apply profits tax, property tax, and stamp duty without crossing anti-avoidance lines.

Salaries tax

  • Salaries tax is charged on Hong Kong-source employment income. Net chargeable income equals income minus deductions minus allowances. Tax is the lower of progressive rates (2%, 6%, 10%, 14%, 17%) or the standard rate of 15% on net income after deductions.
  • Deductions include mandatory MPF, self-education, home loan interest (cap HK$100,000), VHIS premiums (HK$8,000 per insured), elderly residential care, TVC/QDAP, and charitable donations (35% cap).
  • Allowances include basic, married person's, child, dependent parent, and disability allowances.

Other taxes

  • Profits tax uses two-tiered rates: 8.25% on the first HK$2m and 16.5% thereafter for corporations; 7.5% and 15% for unincorporated businesses.
  • Property tax is 15% on net assessable value, after the 20% statutory allowance on rent.
  • Stamp duty applies to property and share transfers; additional buyer's stamp duty and special stamp duty may apply. Hong Kong has no capital gains tax, VAT, or estate duty.

Planning principles

  • Defer, shift, split, and use exemptions. Substance and commercial purpose matter; avoid sham arrangements.

Worked example. Salary is HK$800,000; mandatory MPF is HK$18,000; donations are HK$20,000; basic allowance is HK$132,000; one child allowance is HK$130,000. Net chargeable income is 800,000 − 18,000 − 20,000 − 132,000 − 130,000 = HK$500,000. Progressive tax is 50,000×2% = 1,000; 50,000×6% = 3,000; 50,000×10% = 5,000; 50,000×14% = 7,000; 300,000×17% = 51,000; total HK$67,000. Standard rate tax is 15%×762,000 = HK$114,300. The lower amount, HK$67,000, is payable.

Traps that cost marks: taxing worldwide income; confusing deductions with allowances; forgetting provisional tax; applying the standard rate to chargeable income instead of net income; ignoring the property-tax allowance; and assuming an offshore claim is automatically accepted.