How should Hong Kong residents with both mainland household registration and Hong Kong resident status report their taxes? Do Hong Kong residents working in Hong Kong need to pay taxes to the mainland?

Whether Hong Kong residents working in Hong Kong need to pay taxes to the mainland mainly depends on whether they are determined to be tax residents of the mainland.

Regarding the definition of tax residents

According to the Individual Income Tax Law, individuals who have a residence in China or who do not have a residence but have resided in China for a cumulative total of 183 days are considered resident individuals. Resident individuals are required to pay individual income tax on income obtained from both within and outside China according to regulations.

In simple terms, individuals who have a residence in the mainland or those who do not have a residence but have lived in the mainland for a cumulative total of 183 days are considered Chinese resident individuals, and their foreign income is subject to individual income tax in the mainland.

Individuals who reside abroad for reasons such as study, work, visiting relatives, or tourism, but who plan to return to live in China after these reasons cease, are also considered to have a residence in China and are tax residents of the mainland.

This means that mainland individuals (Hong Kong residents) working in Hong Kong, who have not obtained permanent residency in Hong Kong and still retain their mainland household registration, are generally considered to have a "residence in China," and resident individuals are required to pay taxes on income obtained both within and outside China.

If Hong Kong residents have been working in Hong Kong and have not returned to the mainland, do they need to pay taxes to the mainland in addition to paying taxes in Hong Kong on the income obtained in Hong Kong?

If Hong Kong residents meet the criteria for both Hong Kong and mainland resident individuals, meaning they have dual resident status, then the tax authorities of the mainland and Hong Kong will use the "tie-breaker rule" to further determine the resident status of the Hong Kong residents.

To avoid the risk of double taxation for dual residents, according to the arrangement between the mainland and the Hong Kong Special Administrative Region on avoiding double taxation on income: income obtained by mainland residents from the Hong Kong Special Administrative Region, and the taxes paid in Hong Kong according to regulations, are allowed to be credited against the mainland taxes imposed on that resident.

However, the credit amount should not exceed the tax amount calculated according to mainland tax laws and regulations for that income. Therefore, income obtained in Hong Kong will not be subject to double taxation; the tax amount will be the higher of the two regions.

Therefore, Hong Kong residents can assess whether they simultaneously qualify as tax residents of Hong Kong and the mainland and make reasonable tax planning.