How investments are taxed
Hong Kong has no capital gains tax and no withholding tax on dividends and interest.[2] The Inland Revenue Department charges profits tax on a trade or business, and that tax excludes profits from the sale of capital assets.[1] For a private saver who buys and holds an index fund, there is therefore no special tax-free account to look for. An ordinary account is already lightly taxed.
The MPF numbers
These are the levels the MPFA publishes as current in October 2026.[3]
| Monthly relevant income | Employer pays | Employee pays |
|---|---|---|
| Less than $7,100 | 5% | Nothing |
| $7,100 to $30,000 | 5% | 5% |
| More than $30,000 | $1,500 | $1,500 |
Example: on a monthly income of $25,000 you pay $1,250 and your employer pays $1,250. On $40,000 each side pays the capped $1,500.
The Default Investment Strategy (DIS)
The DIS is a ready-made MPF option built from two globally diversified funds. The Core Accumulation Fund holds about 60% in higher risk assets, mainly global equities. The Age 65 Plus Fund holds about 20%. Your money is moved step by step from the first to the second each year from age 50 to 64.[4] Management fees are capped at 0.75% a year and recurrent out-of-pocket expenses at 0.2% a year, 0.95% in total.[4] To see what a fee does over decades, read fund fees.
Tax-deductible Voluntary Contributions (TVC)
TVC are extra MPF contributions that you can deduct from your taxable income. The maximum deduction is $60,000 for each year of assessment from 2019/20 onwards. The limit is shared with qualifying annuity premiums.[1] The money is locked in the same way as mandatory contributions.[5]
Example: $5,000 a month in TVC is $60,000 a year, exactly the maximum deduction.
When you can take MPF money out
MPF from mandatory contributions and TVC can only be withdrawn when you reach age 65. You can then take it in instalments, take one lump sum, or leave it invested in the scheme.[5] Earlier withdrawal is possible only in certain specific circumstances set out in MPF law.[5]
Stamp duty in a brokerage account
Buyers and sellers of Hong Kong stock each pay stamp duty of 0.1% of the price, a rate in force since 17 November 2023.[1] ETFs listed in Hong Kong are different: the sale, purchase or transfer of shares or units of all ETFs is exempt from stamp duty.[6]
What it means for an index saver
- The MPF is not optional. You and your employer pay in anyway, so the choice is which fund to hold and what it costs.
- The DIS is the broad, fee-capped choice. It is not a pure equity index fund: about 60% is in higher risk assets before age 50.
- TVC trades access for a deduction. You save tax now but cannot touch the money until 65.
- A brokerage account stays flexible. There is no capital gains tax and no stamp duty on Hong Kong-listed ETFs, and you can sell at any time.
Common questions
Do I pay tax when I sell an index ETF at a profit in Hong Kong?
Hong Kong has no capital gains tax. Profits tax applies to a trade or business and excludes profits from the sale of capital assets. If you are unsure whether your activity counts as a business, ask the Inland Revenue Department.
Can I take my MPF out before 65?
Only in specific circumstances set out in MPF law. Otherwise MPF from mandatory contributions and tax-deductible voluntary contributions stays locked until you reach age 65.
Sources & further reading
We cite independent authorities so you can verify everything yourself. Last reviewed 3 Oct 2026.
- Inland Revenue Department — A Brief Guide to Taxes Administered by the Inland Revenue Department 2025–2026
- Financial Services and the Treasury Bureau — Prevailing Tax Policy
- MPFA — Mandatory Contributions: Employees
- MPFA — Default Investment Strategy (DIS)
- MPFA — Withdrawal of MPF Upon Retirement
- Inland Revenue Department — FAQ on Stamp Duty Exemption on Exchange Traded Funds (ETFs)