Hong Kong and US Taxes: What American Expats Need to Know

Hong Kong taxes employment income at low rates, with a maximum effective rate of 15% under the standard rate, and salary income from work performed outside Hong Kong is generally not subject to Hong Kong tax. There is no US-Hong Kong income tax treaty, so US expats in Hong Kong cannot rely on treaty provisions for any relief. The Foreign Earned Income Exclusion is the primary planning tool here: on income up to the annual limit, you can exclude all US income tax, and the low Hong Kong rates mean there is little Foreign Tax Credit available for income above the exclusion. Hong Kong's MPF (Mandatory Provident Fund) is a mandatory retirement savings scheme that is not recognized as tax-deferred by the IRS, and contributions and earnings inside the MPF are generally subject to current US taxation. There is no US-Hong Kong totalization agreement, so self-employed US citizens in Hong Kong may owe US self-employment tax with no treaty relief available.