New legislation in Hong Kong provides a deduction for domestic rents under Salaries Tax and Tax charged under Personal Assessment as proposed in the 2022/23 Budget.

The Inland Revenue (Amendment) (Tax Deductions for Domestic Rents) Bill 2022 (“the Bill”)1 was gazetted and introduced to the Legislative Council in early May 2022.  Subject to the passage of the Bill, individual taxpayers can claim a tax deduction for domestic rents for the year of assessment (“YOA”) 2022/23 onwards, with a ceiling of HK$100,000 for each YOA. [HK$1 = £0.101 | HK$1 = US$ 0.127 | HK$1 = €0.1186 | HK$1 = A$0.175 Source:]


Given the notoriously high cost of accommodation in Hong Kong2, any relief is welcome and this deduction may offer some benefit to individuals not currently benefiting from rental reimbursement through their employer.  

More Details

In order to qualify for the deduction, taxpayers will need to fulfil a number of specified conditions3, including:

  • the relevant domestic premises must be the taxpayer’s principal place of residence;
  • the taxpayer or his/her spouse is not a legal and beneficial owner of any domestic premises in Hong Kong;
  • the taxpayer or his/her spouse is not provided with a place of residence by his/her employer;
  • the rent must be paid by the taxpayer or his/her spouse;
  • the tenancy for that domestic premises must be stamped under the Stamp Duty Ordinance; and
  • domestic rent paid under a sub-lease agreement will also qualify for the deduction, but not under lease purchase agreements.


Subject to completion of the legislative process, the tax deduction for domestic rents will be effective from year of assessment 2022/23.  As this may impact 2022/23 provisional tax assessments, a claim can be made with the 2021/22 individual tax return.  The maximum deduction for rents paid for eligible domestic premises is HK$100,000 per YOA.

It should be noted that the exclusion of individuals with housing provided by their employer will mean that those claiming rental reimbursement will not be eligible for a further deduction.  However, in most scenarios, the benefit of rental reimbursement arrangements will likely exceed the benefit of the deduction, so employers should not be deterred from making the most of such arrangements for their employees’ benefit.  For more details, please refer to the KPMG rental reimbursement flyer and illustration at:


This article is excerpted, with permission, from “Salaries Tax – Tax Deduction for Domestic Rents” in Hong Kong Tax Alert (May 2022, Issue 6), a publication of the KPMG International member firm in Hong Kong.

The information contained in this newsletter was submitted by the KPMG International member firm in Hong Kong.


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