My first Hong Kong tax bill is double what I expected — is it a mistake?
Almost certainly not a mistake. Hong Kong charges provisional tax: your first bill covers the final tax for the year just ended plus an advance payment of next year's tax, estimated at the same amount. That "double bill" surprises almost every newcomer — it's the system working as designed.
How the bill is built
Hong Kong's tax year runs 1 April to 31 March. When the Inland Revenue Department (IRD) issues your first assessment, it contains two parts:
| Component | What it is |
|---|---|
| Final tax | The actual tax on the year just ended, calculated from your return |
| Provisional tax | An advance payment for the current year, estimated at the same amount as the final tax |
So if your final salaries tax is HK$60,000, the bill demands HK$120,000: HK$60,000 for last year, HK$60,000 prepaid for this year. Next year, the provisional amount you already paid is offset against the new final assessment, and you pay the difference plus a fresh provisional charge.
The two instalments
You don't pay it all at once. The total is normally split into two instalments — roughly 75% due around January and 25% around April (exact dates are printed on the demand note). This softens the blow but doesn't remove it, so budget for it.
Why it feels wrong but isn't
Most tax systems collect after the fact. Hong Kong collects a year in advance, every year, on a rolling basis. Once you're in the cycle, each year's bill looks "normal" — it's only the first one that looks doubled, because you're paying two years at once for the first time.
A worked example
You arrive in Hong Kong in July 2025 and start work. For the year of assessment 2025/26 (1 April 2025 – 31 March 2026), your salaries tax comes to HK$48,000. Your first demand note, issued around late 2026, asks for HK$96,000: HK$48,000 final tax for 2025/26, plus HK$48,000 provisional tax for 2026/27. In 2027, suppose your actual 2026/27 tax is HK$52,000 — you pay the HK$4,000 difference plus a new provisional charge of HK$52,000. From then on, it's one year's money each year, rolling forward.
Frequently asked questions
Will I get the provisional part back if I overpay?
Yes — when the final assessment for the provisional year is issued, any excess is offset against the next year's provisional tax, and any remaining balance is refunded.
What if I leave Hong Kong?
Your employer files IR56G before you depart and the IRD issues a final assessment; provisional tax for the year you leave generally doesn't apply once the final bill is settled. There's no exit tax.
Does provisional tax apply to profits tax too?
Yes — companies face the same mechanism: provisional profits tax based on the preceding year's assessable profits, offset when the final assessment issues.
Sources
- https://www.gov.hk/sc/residents/taxes/taxfiling/object/provisional.htm
- IRD guidance on provisional tax collection and set-off (ird.gov.hk)