With the development of the Greater Bay Area, many Hong Kong tax residents face confusion regarding tax filing in both Mainland China and Hong Kong. If you frequently travel across the border for work, are you worried about being double-taxed? This article will teach you how to use the CDTA (Comprehensive Double Taxation Agreement) to apply for tax relief.
Based on the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation (CDTA) and Inland Revenue Department guidelines, this article uses a case study of an annual salary of HK$1,000,000 to explain tax filing principles, credit methods, and tax differences under cross-border work and dual status.
Further Reading: Latest Guide to the eTAX Individual Tax Portal (ITP): One-Stop Tax Filing and Management
Differences Between Hong Kong and Mainland China Tax Systems
Hong Kong: Territorial Basis of Taxation
Mainland China: Resident Tax System and Global Taxation
Individuals with a Domicile (Not subject to the 183-day rule)
If an individual habitually resides in Mainland China due to family, economic interests, or living arrangements, they are considered to have a “domicile.” Such individuals are regarded as resident individuals regardless of their actual number of days stayed and are liable for Individual Income Tax on their global income.
In practice, individuals holding Chinese nationality are usually deemed to have a “domicile” in China. Even if their primary long-term residence is abroad, they may still be defined as Chinese tax residents due to family or economic ties; this does not change regardless of whether they also apply for Hong Kong tax resident status. It must be emphasized: as long as an individual has a “domicile” in Mainland China—including family, economic interest centers, or a habitual residence—they are automatically regarded as a Chinese tax resident, whether or not they hold Hong Kong tax resident status.
In other words, as long as one is a “domiciled individual,” their global income must be declared in China.
Further Reading: [Company Formation Requirements] Can non-Hong Kong residents start a company?
Individuals without a Domicile (Determined by days of stay)
If an individual does not have a domicile in the Mainland, their tax status is determined by the number of days stayed. Cross-border workers staying for 183 days or more in a tax year are considered Chinese resident individuals and are taxed on global income; if they stay for less than 183 days, they are non-resident individuals and only need to pay Individual Income Tax on income sourced within Mainland China.
Scope of Taxation for Residents and Non-Residents
Resident individuals are taxed on their global income; non-resident individuals only need to declare and pay tax on income sourced within Mainland China.
Special Exemptions for Non-Resident Individuals
According to the Chinese Individual Income Tax system, if an individual has no domicile in China and stays for less than 90 days in a tax year, their China-sourced income is exempt from Chinese Individual Income Tax, provided it is paid by an overseas employer and that employer has no establishment or venue in China, and the salary is not borne by a Chinese establishment. This rule is particularly important for Hong Kong employees on short-term business trips to the Mainland, as they are generally exempt if their salary is paid by a Hong Kong company and no Mainland tax is withheld.
Cross-Border Work: How to Determine if You Need to File Taxes in Both Jurisdictions?
Under cross-border work arrangements, whether income must be declared in both Hong Kong and the Mainland depends primarily on the place of work, the number of days stayed, and the employer’s business arrangements.
Further Reading: When will I receive my tax bill? How to check assessment notices on the eTAX Individual Tax Portal (ITP)?
Place of Employment Principle
Tax Case Study: Dual Status with HK$1 Million Annual Salary
Taking a Hong Kong tax resident as an example, receiving a salary in Hong Kong but working in the Mainland.
Assuming an annual salary of HK$1,000,000 for the 2025/26 tax year with no other deductions or allowances, let’s compare the tax rates of both regions.
Hong Kong Salaries Tax Calculation
The tax amount calculated at the standard rate of 15% would be higher and therefore does not apply. The final tax is approximately HK$129,560, with an effective tax rate of about 12.9%.
Comparison of Individual Income Tax in Mainland China
Dual Status Tax Simulation: Tax Burden Comparison for HK$1,000,000 Annual Salary
| Item | Hong Kong Salaries Tax (Hong Kong Salaries Tax) |
Mainland Individual Income Tax (China IIT) |
|---|---|---|
| Annual Salary Income | HK$ 1,000,000 | HK$ 1,000,000 |
| Deductions/Allowances | Basic Allowance HK$ 132,000 | Basic Expense Deduction RMB 60,000 |
| Tax Base | Net Chargeable Income HK$ 868,000 | Taxable Income (Calculated after exchange rate conversion) |
| Applicable Tax Rate | Progressive rates 2% to 17% | 7-level progressive rates 3% to 45% |
| Estimated Tax Payable | Approx. HK$ 129,560 | Approx. RMB 243,000 (Approx. HK$ 260,000) |
| Effective Tax Rate | Approx. 12.9% | Approx. 24.3% |
Don’t want to calculate it yourself? Book a tax consultation with General Accounting now.
Application of Tax Credits for Dual Status Cross-Border Workers
How to Avoid Double Taxation? Methods for Applying for Tax Relief
You must submit supporting documents and complete Section 4 of the Appendix to the Individual Tax Return (BIR60) (Application for exemption from tax of all or part of the income reported in Section 4.1 of the Individual Tax Return (BIR60)).
Using the aforementioned case of a dual-status Hong Kong resident with an annual salary of HK$1 million as an example, the taxpayer should submit the Appendix to the Individual Tax Return and complete Section 4, “Tax paid outside Hong Kong,” when filing their tax return.
When calculating the foreign tax credit, the following information must be provided:
- Employer’s name
- Total income received from the employer
- Income for which exemption is claimed
- Number of days stayed in Hong Kong
Refer to the image below:
Unsure how to fill out Section 4 of the BIR60 Appendix to apply for a credit? Book a tax consultation with General Accounting now.
Required Supporting Documents for Tax Relief Applications
Tax documents from outside Hong Kong
Tax assessments or tax receipts issued by tax authorities outside Hong Kong. For example, tax calculation notices issued by Mainland tax authorities, individual tax declaration certificates (specifying income, year, and tax paid), or Mainland tax payment certificates (showing tax already paid).
Example: If you are a cross-border worker employed in Shenzhen and have paid Mainland Individual Income Tax, you need to submit a “Tax Payment Certificate” issued by the Shenzhen Local Taxation Bureau to the Hong Kong Inland Revenue Department as supporting evidence for your tax relief application.
Employment Contract and Proof of Work Arrangements
Employment contract (specifying position, source of salary, place of employment) or a description of work arrangements/actual work location (e.g., performing duties extensively in the Mainland).
Travel Records
A chart detailing entry and exit activities in Hong Kong for the relevant tax year (e.g., 1/4/2025–31/3/2026).
Passport or Other Travel Documents
To prove your entry and exit activities in Hong Kong during the relevant tax year.
Other Supplementary Information
- Salary slips
- Bank deposit proof
- Company declaration letter
Frequently Asked Questions
Do I need to file taxes for short-term business trips to the Mainland of less than 183 days?
Generally exempt, provided that: the salary is paid by a Hong Kong company, no Mainland tax is withheld, and the employer has no permanent establishment in the Mainland.
If I am employed by both Hong Kong and Mainland companies for cross-border work, do I need to file taxes separately?
Yes. Income from each region must be declared separately and taxed according to the source.
If I have worked in the Mainland for over 183 days and paid tax there, do I still need to file taxes in Hong Kong?
Yes, but you can apply for a foreign tax credit under the CDTA to avoid double taxation.
How to handle dual tax residency for cross-border work?
According to Article 4 of the CDTA, the primary residency is determined by factors such as the permanent home, center of vital interests, and habitual abode.
Can the tax credit fully offset the tax?
The credit is capped at the tax payable on that income locally; any excess is non-refundable.
Is there a deadline for applying for double taxation relief?
The application for double taxation relief must be made within two years after the end of the relevant tax year. For example, for income from the 2024/25 tax year (ending March 31, 2025), the relief application must be submitted by March 31, 2027, at the latest.
Conclusion
Hong Kong adopts a territorial tax system, while Mainland China uses a resident tax system. Residency determination centers on domicile and days of stay. If the same income is taxable in both jurisdictions, a foreign tax credit can be claimed under the CDTA to avoid double taxation. Cross-border workers should properly maintain documents such as employment contracts, tax bills, travel records, and tax payment certificates.
General Accounting has been established for over 20 years with more than 30 years of tax experience. Our professional tax consultants provide Hong Kong-Mainland tax arrangement and foreign tax credit calculation services. Trust or Corporate Service Provider License No.: TC002940. If you have any questions regarding avoiding double taxation, our professional account managers can provide a free initial consultation for dual-status tax filing for cross-border work.
Further reading:
Sources
1. Inland Revenue Department – Arrangement between the Mainland of China and the HKSAR for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
https://www.ird.gov.hk/eng/pdf/Consolidated_Text_Mainland_HKSAR.pdf
2. Regulations for the Implementation of the Individual Income Tax Law of the People’s Republic of China
https://www.gov.cn/zhengce/content/2018-12/22/content_5351177.htm
3. Certificate of Resident Status
https://www.ird.gov.hk/eng/tax/dta_cor.htm
4. Double Taxation Relief
https://www.ird.gov.hk/eng/pol/dta.htm
5. How to Report Income in Your Tax Return
https://www.gov.hk/en/residents/taxes/salaries/salariestax/exemption/employee.htm
