A developer rents a flat in Sai Ying Pun, is paid into a Delaware account and assumes there is no Hong Kong tax to worry about: foreign employer, money never touches Hong Kong. A finance director of a Hong Kong group lives in Dubai, flies in once a quarter and treats his director's fee as untaxed. Both are wrong, for different reasons, and both errors are visible in a single document — the IRD's DIPN 10.
Salaries tax under s 8(1) of the Inland Revenue Ordinance charges income arising in or derived from Hong Kong from any office or employment of profit. The Ordinance gives no rules for determining source, so the question is settled by locating the employment itself. That is where the counter-intuitive part begins: for s 8(1) the place where the services are physically performed carries no weight at all.
Concept
The High Court decision in CIR v George Andrew Goepfert, 2 HKTC 210 (1987), which the IRD quotes in DIPN 10, puts it without hedging: "It follows that the place where the services are rendered is not relevant to the enquiry under section 8(1) as to whether income arises in or is derived from Hong Kong from any employment. It should therefore be completely ignored." MacDougall J added the second consequence: once income falls within s 8(1), the entire salary is charged wherever the services were rendered, and the Ordinance provides for no apportionment.
That produces the fork which governs everything else. Under a Hong Kong employment the whole year's income is charged. Under a non-Hong Kong employment the basic charge does not bite, and the extension in s 8(1A)(a) takes over: income is charged for services rendered in Hong Kong, including leave pay attributable to those services.
The IRD explains where the line falls through three factors carrying particular emphasis in an assessment of the totality of the facts: where the contract of employment was negotiated and entered into and where it is enforceable; where the employer is resident; and where the employee's remuneration is paid. Employer residence turns on central management and control in the logic of De Beers Consolidated Mines Ltd. v. Howe, and the place of board meetings matters only in so far as management is genuinely exercised through them. The same test governs the residence of a Hong Kong employer for profits tax — the corporate side is covered in Hong Kong Company.
The Department gives one warning of its own: general statements of employment with an overseas entity are not accepted at face value. The IRD expects a written contract properly executed by both parties, and it reviews an accepted non-Hong Kong employment periodically. An oral understanding with a foreign company is no defence in 2026.
What the 60-Day Rule Actually Does
The text of s 8(1B) is short: "In determining whether or not all services are rendered outside Hong Kong for the purposes of subsection (1A) no account shall be taken of services rendered in Hong Kong during visits not exceeding a total of 60 days in the basis period for the year of assessment." Three mechanical details turn this provision into a trap.
The first is what gets counted. The High Court in CIR v So Chak Kwong, Jack, 2 HKTC 17 (1986) held that the words "not exceeding a total of 60 days" qualify the word "visits" and not the words "services rendered". The count runs across every day of every visit, weekends, holidays and days without a single working minute included.
The second is the cliff at day 61. Under DIPN 10 an employee holding a Hong Kong employment who is posted abroad is wholly exempt while all services are rendered there; at 61 days of visits during which he renders any services here he becomes "liable on the whole of his income derived in a year". Under a non-Hong Kong employment crossing the threshold costs less: only the Hong Kong share is charged under s 8(1A)(a).
The third is the word "visit" itself. The provision protects trips, and the IRD states plainly that a person may be chargeable even on 60 days or fewer where this is the start or finish of a long period of residence in Hong Kong or where the presence does not constitute a visit. For someone living in Hong Kong and working remotely from there, the 60-day rule is out of reach entirely. Singapore's threshold shares the number and differs in machinery, and substituting one for the other fails — see Singapore's 60-day rule.
The Day Computation
For a non-Hong Kong employment the IRD looks at the number of days the employee spent in Hong Kong and apportions the remuneration, leave pay included, on a time-in time-out basis. A different approach applies in exceptional circumstances — for instance where the employee establishes that the rate of remuneration for services rendered outside Hong Kong is substantially greater.
Four 2026 Scenarios
The same provisions produce sharply different outcomes across the popular configurations.
| Situation | Where the employment sits | What Hong Kong charges | Principal risk |
|---|---|---|---|
| A nomad lives in Hong Kong, works for a US company under a contract concluded in the US | Non-Hong Kong employment on the three factors | Income for Hong Kong days under s 8(1A)(a); living here, that is effectively the whole year | The 60-day rule is unavailable: the presence is no visit |
| A Hong Kong resident works remotely for a Singapore company under a contract signed in Hong Kong | Hong Kong employment | The whole year's income wherever the services were rendered | No apportionment under s 8(1); only s 8(1A)(c) helps |
| A director of a Hong Kong company lives in Dubai and never travels in | Office of profit under s 8(1) | The entire director's fee | Neither the s 8(1A) extension nor the s 8(1A)(b) and (c) exclusions touch a fee |
| Dual contracts: part under a Hong Kong contract, part under an offshore one | Assessed on the totality of the facts | Turns on whether the IRD accepts the offshore contract as real | Claims of overseas employment are not taken at face value and are reviewed |
The third row is the most underrated. Under DIPN 10 fees paid to a person holding the office of director of a corporation whose central management and control are exercised in Hong Kong are Hong Kong income "irrespective of where the person resides", because the office is located where the corporation's management is exercised (McMillan v. Guest, 24 TC 190). Days, visits and UAE tax payments change none of it.
A unilateral escape from double taxation exists, and it is narrow. Under s 8(1A)(c), in force since 1 April 1987, income for services rendered outside Hong Kong is excluded where in the territory of performance the person is chargeable to and has paid a tax of substantially the same nature as salaries tax. The foreign rate and the assessment method are irrelevant. Actual payment is mandatory: where the foreign liability nets to zero the exclusion fails, which closes this route for a move to a jurisdiction with no income tax.
Treaty Protection: 183 Days
Double taxation agreements supply a second line of defence, and its conditions are cumulative. Under Article 14(2) of the Arrangement with the Chinese Mainland — the standard formulation across Hong Kong's network — remuneration is taxable only in the side of residence where, at the same time: presence in the other side does not exceed 183 days in the aggregate in any 12-month period commencing or ending in the taxable period concerned; the remuneration is paid by, or on behalf of, an employer who is not a resident of the other side; and the remuneration is not borne by a permanent establishment the employer has there. Failing any one of the three removes the exemption entirely.
Directors' fees sit outside this logic under Article 15 and may be taxed in the side where the company is resident.
Using that protection requires resident status for the treaty and the IRD certificate that evidences it; a dual residence is settled by the Article 4(2) tie-breaker: permanent home, centre of vital interests, habitual abode, mutual agreement. The residence tests, the Certificate of Resident Status procedure and its limits are set out in Hong Kong tax residence, the composition of the network in Hong Kong's tax treaty network, and the general arithmetic of day counting in Tax Residency: 183 Days. Entertainers and sportspersons run on their own articles — see Esports: visas, prize money and withholding.
MPF and Administration
A foreign employer rarely operates Hong Kong payroll, so the duty to start the process sits with the employee. Under s 51(2) of the IRO a person chargeable to tax for a year of assessment must inform the Commissioner in writing not later than 4 months after the end of the basis period — 31 July for salaries tax — unless already required to furnish a return. Leaving Hong Kong calls for a separate written notice at least one month before the expected date of departure.
MPF runs on its own logic. The system covers employees aged 18 to 64 employed for a continuous period of 60 days or more. For an employee employed in or from Hong Kong but working outside it, the MPFA applies a sufficient connection test and states expressly that "whether the employee's salary is paid in Hong Kong or whether the employer is incorporated in Hong Kong is irrelevant".
Exemptions include people entering Hong Kong under section 11 of the Immigration Ordinance for employment of not more than 13 months and members of a retirement scheme outside Hong Kong; once 13 months pass, the employee must be enrolled within 60 days. The visa routes that decide whether working from Hong Kong is lawful at all are collected in Hong Kong Residency.
Risks
The wider map of Hong Kong topics and adjacent decisions sits in the Hong Kong hub; combinations with the Spanish inbound regime are set out in Beckham Law plus Hong Kong.