Does Hong Kong Have VAT or GST? Explained for Overseas Founders

Back in 2006, Hong Kong came within months of charging you a 5% tax on almost everything you buy. The government proposed it, ran a nine-month public consultation, and the public killed it. That's why, to this day, one of the very first questions every overseas founder asks has such a satisfying answer. So does Hong Kong have VAT or GST? No. Hong Kong has no value-added tax, no goods and services tax, and no general sales tax at all. Nothing added at checkout, no VAT returns, no registration. For an e-commerce founder used to VAT in Europe or GST in Singapore, that can feel like a cheat code. There's just one honest caveat I'll come back to near the end.

No VAT in Hong Kong doesn't mean your sales are tax-free everywhere else. Let's be precise about what Hong Kong does and doesn't charge. Hong Kong's taxes are set by the Inland Revenue Ordinance, Chapter 112, and that ordinance contains no VAT and no GST, because neither has ever existed here. Instead, Hong Kong runs on just three direct taxes – profits tax on company profits, salaries tax on employment income, and property tax on rental income. That's essentially it. No capital gains tax, no tax withheld on dividends, and because Hong Kong is a free port, no customs duty on general imports and exports either.

So when you sell a product, there's no consumption tax layered on top of the price, the way a 20% VAT sits on a UK sale, or a 9% GST sits on a Singapore one. So why doesn't Hong Kong have one? It wasn't an accident. It was a decision. Economists have long warned that Hong Kong's tax base is narrow. A relatively small number of people and companies carry most of the load, which makes revenue swing with the economy. A broad consumption tax would smooth that out. So in 2006, the government formally proposed a 5% goods and services tax and opened a nine-month consultation. The response was overwhelming. Of around 2,200 submissions, roughly two in three were against it.

By December that year, the financial secretary withdrew the plan entirely, and no serious attempt has been made since. The takeaway for you? Hong Kong's no VAT status isn't a temporary quirk. It's politically very hard to reverse. There's one honest caveat worth a mention. Hong Kong charging you no VAT doesn't change the rules in the country your customer is in. A Hong Kong company isn't a way to escape tax everywhere else. I won't go down the rabbit hole of every country's rules here. They differ market by market, and they change.

But to give you a flavor, e-commerce clients often tell us that when they sell into the European Union for imported parcels worth up to €150, the online marketplace they sell on is usually treated as the supplier and collects the VAT. While sellers going direct register through an import scheme. Treat that as a heads-up, not tax advice, and check the rules for the markets you actually sell to. We get into the Amazon and Shopify side in our e-commerce setup video. To be completely accurate, because no consumption tax gets oversimplified, Hong Kong does levy a few narrow duties.

Under the Dutiable Commodities Ordinance, Chapter 109, excise duty applies to exactly four things, liquor, tobacco, hydrocarbon oil, that's fuel, and methyl alcohol. If your business doesn't touch those, this never affects you. There's also a Hotel Accommodation Tax, 3% on hotel and guesthouse room charges, brought back at the start of 2025 after years at zero, which matters to hotels and travelers, not to a typical online seller. And when you transfer Hong Kong shares or property, stamp duty applies. None of these is a general sales tax, they're narrow and targeted. And for most founders, they simply never come up. Here's the honest framing, because Hong Kong is low tax, not no tax.

No VAT is a real simplicity win, less paperwork, no consumption tax returns, cleaner pricing. But it isn't a magic shield. Your Hong Kong company still pays profits tax on its profits. We break those rates down in our video on whether Hong Kong companies really pay 0 % tax. And you still owe VAT, GST, or sales tax wherever your customers are. Treat no VAT in Hong Kong as one less thing to file at home, not as a reason to ignore tax abroad. The facts in 30 seconds. Hong Kong has no VAT, no GST, and no general sales tax. Full stop. It runs on three direct taxes, profits, salaries, and property. A 5% GST was proposed in 2006 and rejected, and hasn't returned.

The only consumption-type charges are narrow excise duties on four commodities and a 3% hotel tax. And a caveat for sellers, Hong Kong's zero rate doesn't cover the tax rules in your customers' own countries. Check those separately. This is where clarity pays off. At CapTime Corporate Management Limited, we help overseas founders and e-commerce sellers set up and run Hong Kong companies. And because there's no VAT or GST here, your Hong Kong compliance is refreshingly simple. Profits tax, the annual return, and audited accounts, which we handle with month-by-month bookkeeping and audit arranged and tax filing under one roof.

So you can focus on selling, knowing your Hong Kong filings are in good hands. hk, or use the link in the description. No credit card, no obligation. If this cleared things up, give it a like and subscribe. It genuinely helps other founders find these answers. Thank you for watching, and I'll see you in the next video.