A freelancer may see themselves as a causal employee working with different employers without committing his/her full time to them. However, without any relationship of master and servant, if the freelancer’s income is derived from providing professional or personal services in Hong Kong, he/she will be considered as carrying on a business and a self-employed person.
Whether such master and servant relationship exists depends on the facts and circumstances of each case. Relevant factors may include the degree of control exercised, the form of remunerations received, the extent of integration with the employer among others.
A self-employed person may be a sole proprietor or a partner of a partnership business. As a self-employed person, you are chargeable to profits tax on the assessable profits of your sole proprietorship or partnership business.
Self-employed Freelancer Tax Obligations
• Register your unincorporated business with the Hong Kong Inland Revenue Department (“IRD”) within 1 month from its date of commencement of business.
• Keep sufficient business records for at least 7 years.
• Prepare accounts based on your accounting records.
• Complete and submit a tax return for reporting business profits or losses.
• Notify the IRD in writing about your liability to tax, not later than 4 months after the end of the basis period for the year of assessment concerned, unless you have already received the tax return from the IRD.
• Notify the IRD about the cessation of your business within 1 month of cessation.
• Notify the IRD about your change of address within 1 month of the change.
• Pay the taxes.
In view of the foregoing, people working as a freelancer should be mindful of the tax and other reporting obligations in Hong Kong. Failure to fulfilling these requirements may lead to penal actions taken against you by the government.
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