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Characteristics of Hong Kong Property Tax and Rates on Property

Hong Kong property tax is levied annually on the owner(s). If the property is owned by two or more persons, tax assessment will be in the name of joint-owners/co-owners and liability to pay Hong Kong property tax and provisional property tax is joint and several.

Hong Kong property tax, which is governed by the provisions of the Hong Kong Inland Revenue Ordinance, has the following characteristics:

  • Property tax is levied on buildings, part of buildings, wharves, piers and other structures located in Hong Kong.
  • Property tax is computed at the standard rate on the net assessable value of a property for the relevant year of assessment.
  • The annual assessment to property tax is based on 100% of the annual (a year of assessment runs from 1 April to 31 March of the following year) rental income of the property less any rates paid, irrecoverable rents and 20% statutory allowance for repairs and outgoings. In determining “rental income”, it will include any gross rent received or receivable, payment for the right of use of premises under licence, service charges or management fees paid to owner, owner’s expenditure borne by the tenant, sum’s previously deducted as irrecoverable rent and now recovered and lump sum premium.
  • In order to assist IRD to assess the property tax, the owner is obliged to keep sufficient records of rent received (lease agreements, rental receipts, receipts for payment of rates, correspondence relating to modification of lease terms and recovery of rent in arrears) for at least 7 years and inform the tax authorities of the actual sums received.

Rates on Property
Rates are tax levied on the occupation of property and are charged at a percentage of the rateable value of the property. The rateable value of a property is an estimate of the annual open market rental value of the property. Both the owner and the occupier are liable for rates. In practice, this will depend on the terms of the agreement between the owner and occupier of the property. In the absence of any agreement, liability of rates rests with the occupier. For the financial year 2020/21, the annual rates percentage charge is 5% of the rateable value of the property.

Source:Hong Kong Inland Revenue Department’s website
- https://www.ird.gov.hk/eng/pdf/ind_ppt_paye.pdf
- https://www.ird.gov.hk/eng/tax/ind_ppt.htm
- https://www.rvd.gov.hk/doc/en/ratesandrent.pdf

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