Freelancing in Hong Kong? Here’s How Your Tax Actually Works

The two-hat world: where each income goes

Your salary is taxed under salaries tax (薪俸稅) and reported on your BIR60 — the individual tax return that arrives each May. Your freelance earnings, if they amount to a business, are taxed under profits tax instead. Different tax, same you.

• Salaried only: one form, the BIR60. Done.
• Salaried plus solo freelance: still the BIR60 — it has a part for sole-proprietorship business profits, so your two incomes travel on one form, in separate sections. They are not added into the employment-income boxes.
• Freelancing with a partner: a partnership files its own profits tax return (the BIR52), separately from each partner’s BIR60.

One genuinely useful quirk: if you report business profits, your filing deadline is later than the standard salaried one — sole proprietors get roughly three months from the issue date rather than one. The main 2025/26 guide has the standard deadlines for comparison.

What counts as a business (the trade test)

Getting paid into your personal account doesn’t make something a business, and invoicing through a friend’s company doesn’t stop it being one. What the IRD looks at is the substance.

• Frequency. One illustration sold at a market is a hobby. Taking commissions every month is a practice.
• Organisation. A rate card, a portfolio site, repeat clients, equipment bought for the work — these all point to a business.
• Profit-seeking intent. You price the work to earn from it, not to cover materials for fun.

If most of those describe your side work, treat it as a business for tax: declare the profits, claim the expenses, and sort the registration below. That’s not a punishment — businesses get to deduct things employees can’t.

Do you need a business registration?

If you’re carrying on a business — even a one-person freelance practice with no name and no office — you’re generally required to register it, and the rule expects you to do so within about a month of starting. There’s no neat revenue level below which the requirement vanishes, though genuinely tiny operations can apply for an exemption. The current fee and the exemption thresholds change from time to time, so check the IRD’s business registration pages rather than a screenshot from a forum.

And the question under the question: what if I should have registered two years ago? The honest answer is calmer than the forums suggest. You register now, the registration is backdated to when the business began, and you pay the fees you would have paid for those years. Penalties exist for the persistent and the deliberately evasive; for someone who walks in voluntarily and settles the back fees, the matter usually ends there. Late is routine. Voluntary is cheap. Discovered is expensive.

Allowable expenses: the only three categories you need

For freelance profits, you deduct what it cost you to earn the income. Almost everything a solo freelancer legitimately claims fits in three buckets.

The discipline that makes all of this easy is boring: keep the invoices and receipts in one folder as you go. You don’t submit them with the return — you produce them if asked.

The “IRD wrote me a letter” scenario

At some point many freelancers get a letter — typically because a client reported paying you, and the IRD wants to match that against a return. Read it slowly: it almost always just asks you to confirm or supply information by a stated date, usually about a month out.

• Answer the questions asked, factually and briefly.
• Attach the figures or invoices it requests — no more, no less.
• If you need more time, ask for it before the deadline. The IRD grants reasonable extensions to people who communicate.

Most of these exchanges end with no action taken, or with a small adjustment and an ordinary tax bill. The letter is a question, not a verdict.

Can the IRD see my bank account? (the CRS question)

For accounts you hold outside Hong Kong, broadly yes: under the Common Reporting Standard, overseas banks report account information to their tax authority, which exchanges it with Hong Kong. For ordinary local accounts there’s no equivalent automatic feed — but the IRD doesn’t need one, because clients, payment records and its own enquiry powers already exist. The practical conclusion isn’t fear, it’s simplicity: declare the income and the question of who can see what stops mattering.

One more lever: personal assessment

If you have both salary and business profits, you can elect personal assessment (個人入息課稅) — an option that pools all your income and applies your allowances and the progressive rates to the total. Depending on your numbers it can beat paying profits tax on the freelance income separately. It’s a yearly election made on the BIR60, and the maths is exactly the kind of thing the calculator exists to do for you.

The four-step checklist for this filing season

1. Split your year into the two hats. Salary on one list, freelance income for 1 April 2025 – 31 March 2026 on the other.
2. Total your freelance expenses in the three buckets above, with the mixed-use items apportioned honestly.
3. Sort your business registration — register, or settle the backdating, before filing season rather than during it.
4. File once, on time, via eTAX — and compare personal assessment before you submit.

Send this to the freelancer in your group chat who’s been quietly worrying about it for two years. If either of you wants the return itself worked through line by line, the HK$128 Filer pack on the Filer page does that; this guide alone should get you most of the way there.