Hong Kong is known for its territorial tax regime and business-friendly environment. However, non-resident individuals and corporations earning certain types of income sourced from Hong Kong may still be liable for withholding tax. In this guide, we will explore what withholding tax is, who needs to pay for it and the withholding tax rates.
Content Outline
Key Takeaways
Withholding Tax Overview
Withholding tax in Hong Kong applies to certain Hong Kong-sourced payments made to non-resident individuals or corporations, mainly covering royalties and fees to entertainers or sports professionals.
Types of Income Subject to Tax
Hong Kong does not tax dividends or interest, but it does impose withholding tax on royalty payments and performance-related earnings by non-residents.
Who Must Pay and Deduct
The local payer is responsible for deducting and remitting the withholding tax to the IRD when paying non-residents who earn qualifying income from Hong Kong sources.
Applicable Withholding Tax Rates
The withholding tax rates can be vary by income type, residency, and association with the Hong Kong payer, ranging from 2.475% to 16.5%, depending on circumstances.
Use of Double Taxation Treaties (DTAs)
Over 45 DTAs help reduce or eliminate withholding tax for qualifying jurisdictions, requiring proper documentation and tax residency proof.
What Is Withholding Tax?
Withholding tax is a form of tax deducted at the source before a payment is made to a non-resident. In Hong Kong, this tax applies to specific payments made to individuals or companies that do not reside or operate primarily within the region. The taxpayer is responsible for deducting the appropriate tax amount and remitting it to the Inland Revenue Department (IRD).
Types of Incomes Subject to Withholding Tax
Unlike many jurisdictions, Hong Kong does not impose withholding tax on dividends or interest. It focuses primarily on two types of income:
Payments for Royalties
Royalty payments made to non-residents for the use of intellectual property (IP) are subject to withholding tax. This includes:
- Copyrights (books, music, software)
- Patents and trademarks
- Exhibition or use of cinematography, television film or tape
- Advertising and promotional materials
- Technical knowledge related with intellectual property inside and outside of Hong Kong
Withholding tax applies even if the IP is used both in and outside of Hong Kong. The tax rate depends on whether the non-resident recipient has connection with the Hong Kong payer.
Payments for Entertainers and Sports Professionals
Non-residents entertainers and sportspeople who perform in Hong Kong are also subject to withholding tax including:
- Live or recorded performances at commercial events
- Appearances in films, TV shows or audio recordings
- Participation in broadcasts or other media productions
The applicable withholding tax rate is determined whether the contract is made directly with the performer or through an intermediary.
Who Has To Pay Withholding Tax in Hong Kong?
Withholding tax is primarily imposed on non-residents receiving Hong Kong-sourced income. This include:
- Non-resident individuals: Foreigners who stay or work in Hong Kong for less than 180 days during the tax year.
- Non-resident corporations: Companies whose central management and control are located outside of Hong Kong.
What Entities Are Considered Associates?
The IRD imposes higher withholding tax rates on payments made to associates of Hong Kong payers. Determining associates is crucial in calculating the correct withholding tax rate. An associate can be:
- Individuals: Relatives, business partners, partnerships that involve the individual as a director or principal officer of a controlled corporation.
- Corporations: Parent companies, subsidiaries, companies under common control, directors or officers of the corporation and their relatives.
- Partnerships: Any partners in the partnerships, their relatives, corporations controlled by the partnership, or where a director is also a partner.
Withholding Tax Rates in Hong Kong
| Payment Type | Withholding Tax Rate |
| Royalties (from a Hong Kong associate) | Non-resident individuals : 15%Non-resident companies: 8.25% – 16.5% |
| Royalties (not from a Hong Kong associate) | Non-resident individuals : 4.5%Non-resident companies: 2.475% – 4.95% |
| Entertainment or Sports Performances (Direct payment to individual) | Non-resident entertainer/sportsperson: 10% |
| Entertainment or Sports Performances (through non-resident individual/partnership agent) | Non-resident agents: 10% |
| Entertainment or Sports Performances (through non-resident corporate agent) | Non-resident companies: 11% |
| Dividends & Interest | All non-residents: not applicable (0%) |
Double Taxation Treaties
Hong Kong has signed over 45 Double Taxation Agreements (DTA) with jurisdictions around the world. These treaties aim to avoid double taxation for income earned across borders which allow tax reduction or exemption from withholding tax. Although dividend and interest income are not taxed in Hong Kong, DTA is particularly useful for royalty and performance payments. The applicable tax rates under a treaty may be significantly lower than domestic rates, but eligibility requires proper documentation and tax residency certification from the foreign jurisdiction.
Tax Rates for Dividends, Interest, Royalties and Technical Fees
| Country / Region | Effective From | Dividends | Interest(%) | Royalties(%) | Technical Fees(%) | |
| Qualifying Companies(%) | Others(%) | |||||
| Armenia | Pending | 0 | 5 | 5 | 5 | NA |
| Austria | Year of Assessment2012/2013 | 0 | 10 | – | 3 | NA |
| Bahrain | Pending | – | – | 5 | NA | |
| Bangladesh | Year of Assessment2025/2026 | 10 | 15 | 10 | 10 | 10 |
| Belarus | Year of Assessment2018/2019 | 5 | 5 | 3/5 | NA | |
| Belgium | Year of Assessment2004/2005 | 0/5 | 15 | 10 | 5 | NA |
| Brunei | Year of Assessment2011/2012 | – | 5/10 | 5 | 15 | |
| Cambodia | Year of Assessment2020/2021 | 10 | 10 | 10 | 10 | |
| Canada | Year of Assessment2014/2015 | 5 | 15 | 10 | 10 | NA |
| Croatia | Year of Assessment2025/2026 | 5 | 5 | 5 | NA | |
| Czech | Year of Assessment2013/2014 | 5 | – | 10 | NA | |
| Estonia | Year of Assessment2020/2021 | 0 | 10 | 0/10 | 5 | NA |
| Finland | Year of Assessment2019/2020 | 5 | 10 | – | 3 | NA |
| France | Year of Assessment2012/2013 | 10 | 10 | 10 | NA | |
| Georgia | Year of Assessment2022/2023 | 5 | 5 | 5 | NA | |
| Guernsey | Year of Assessment2014/2015 | – | – | 4 | NA | |
| Hungary | Year of Assessment2012/2013 | 5 | 10 | 5 | 5 | NA |
| India | Year of Assessment2019/2020 | 5 | 10 | 10 | 10 | |
| Indonesia | Year of Assessment2013/2014 | 5 | 10 | 10 | 5 | NA |
| Ireland | Year of Assessment2012/2013 | – | 10 | 3 | NA | |
| Italy | Year of Assessment2016/2017 | 10 | 12.5 | 15 | NA | |
| Japan | Year of Assessment2012/2013 | 5 | 10 | 10 | 5 | NA |
| Jersey | Year of Assessment2014/2015 | – | – | 4 | NA | |
| Korea | Year of Assessment2017/2018 | 10 | 15 | 10 | 10 | NA |
| Kuwait | Year of Assessment2014/2015 | 5 | 5 | 5 | NA | |
| Latvia | Year of Assessment2018/2019 | 0 | 10 | 0/10 | 0/3 | NA |
| Liechtenstein | Year of Assessment2012/2013 | – | – | 3 | NA | |
| Luxembourg | Year of Assessment2008/2009 | 0 | 10 | – | 3 | NA |
| Macao SAR | Year of Assessment2021/2022 | 5 | 5 | 3 | NA | |
| Mainland of China | Year of Assessment2007/2008 | 5 | 10 | 7 | 5/7 | NA |
| Malaysia | Year of Assessment2013/2014 | 5 | 10 | 10 | 8 | 5 |
| Malta | Year of Assessment2013/2014 | – | – | 3 | NA | |
| Mauritius | Year of Assessment2024/2025 | 0 | 5 | 5 | 5 | NA |
| Mexico | Year of Assessment2014/2015 | – | 4.9/10 | 10 | NA | |
| Netherlands | Year of Assessment2012/2013 | 0 | 10 | – | 3 | NA |
| New Zealand | Year of Assessment2012/2013 | 0/5 | 15 | 10 | 5 | NA |
| Pakistan | Year of Assessment2018/2019 | 10 | 10 | 10 | 12.5 | |
| Portugal | Year of Assessment2013/2014 | 5 | 10 | 10 | 5 | NA |
| Qatar | Year of Assessment2014/2015 | – | – | 5 | NA | |
| Romania | Income derived on or after 01.01.2017 | 3 | 5 | 3 | 3 | NA |
| Russia | Year of Assessment2017/2018 | 0/5 | 10 | – | 3 | NA |
| Saudi Arabia | Year of Assessment2019/2020 | 5 | – | 5/8 | NA | |
| Serbia | Year of Assessment2021/2022 | 5 | 10 | 10 | 5/10 | NA |
| South Africa | Year of Assessment2016/2017 | 5 | 10 | 10 | 5 | NA |
| Spain | Year of Assessment2013/2014 | 0 | 10 | 5 | 5 | NA |
| Switzerland | Year of Assessment2013/2014 | 0 | 10 | – | 3 | NA |
| Thailand | Year of Assessment2006/2007 | 10 | 10/15 | 5/10/15 | NA | |
| Türkiye | Pending | 5 | 10 | 7.5/10 | 7.5/10 | NA |
| United Arab Emirates | Year of Assessment2016/2017 | 5 | 5 | 5 | NA | |
| United Kingdom | Year of Assessment2011/2012 | 0/15 | Domestic rate | 3 | NA | |
| Vietnam | Year of Assessment2010/2011 | 10 | 10 | 7/10 | NA | |
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Conclusion
Withholding tax in Hong Kong is applied to non-resident recipients of royalties and performance-related payments. Businesses that make such kinds of payments must understand their obligations and the rates that apply. Ensure to leverage double taxation treaties to help reduce costs, with careful planning and compliance.
For expert assistance with Hong Kong tax compliance and cross-border payments, consult with our team at FastLane Group. Whether you’re paying royalties to a foreign entity or working with international performers, FastLane Group can help you stay compliant and optimize your tax position. Contact us now!
