Japan vs Hong Kong taxes (2026): income, company and capital gains

Japan vs Hong Kong tax rates at a glance

Tax	🇯🇵 Japan	🇭🇰 Hong Kong
Income tax	National income tax: 5% - 45% Highest bracket tax: 45% Inhabitant tax: 4% + 6% Reconstruction surtax: 2.1% of income tax Non-resident salary: 20.42% Employment-income deduction: ¥650,000 minimum Individual enterprise tax: 3% - 5% Very-high-income additional rule: 22.5% comparison rate	Salaries tax: 2% - 17% Standard rate cap: 15% / 16% Foreign-sourced salary: 0% / source-based Employee MPF: 5% Employer MPF: 5% Tax on wages: 2% - 17%
Corporate tax	Standard national corporation tax: 23.2% Qualifying SME first ¥8 million: 15% Certain high-income SMEs first ¥8 million: 17% Large-company effective rate: 30.64% Qualifying SME effective bands: 21.94% / 23.73% / 34.43% Pillar Two minimum: 15%	Corporate profits tax: 8.25% / 16.5% Standard company tax: 16.5% Offshore profits: 0% DMTT for in-scope MNEs: 15% Dividend withholding tax: 0% VAT / GST: 0%
Capital gains tax	Listed securities: 20.315% Long-term land and buildings: 20.315% Short-term land and buildings: 39.63% Cryptoassets: Progressive income rates Main-home special deduction: Up to ¥30 million	Capital gains tax: 0% Crypto capital gains tax: 0% Shares and securities gains: 0% Real estate gains: 0%
Dividend tax	Listed shares below 3%: 20.315% Unlisted shares: 20.42% Listed shares at or above 3%: 20.42% National portion on listed shares: 15.315% Local portion on listed shares: 5% NISA dividends: 0%	Dividend withholding tax: 0% Domestic dividend tax: 0% Foreign dividend tax: 0%
Wealth tax	Personal net wealth tax: 0% Fixed asset tax: 1.4% City planning tax: Up to 0.3% Business-office tax: ¥600 / m² + 0.25% payroll	Net wealth tax: 0% Net worth tax: 0% Annual asset tax: 0%
Inheritance / estate tax	Inheritance tax range: 10% - 55% Basic exemption: ¥30m + ¥6m × statutory heirs Statutory share up to ¥10m: 10% Statutory share ¥100m - ¥200m: 40% Statutory share ¥300m - ¥600m: 50% Statutory share above ¥600m: 55% Spouse credit: ¥160m or legal share Annual gift exemption: ¥1.1 million	Inheritance tax: 0% Estate tax: 0% Gift tax: 0% Probate tax: 0%
VAT / GST / sales tax	Consumption tax: 10% / 8%	VAT / GST: 0%
Other key taxes	Special reconstruction surtax: 2.1% of income tax Inhabitant tax: About 10%	Salaries tax: 2% - 17% Standard rate cap: 15% / 16%

Who wins on each tax

Personal income taxHong Kong

Hong Kong's progressive salaries-tax rate tops at 17%, below Japan's 45% national rate before local tax and reconstruction surtax.

Corporate taxHong Kong

Hong Kong's two-tier profits tax is 8.25%/16.5%, below Japan's 23.2% national rate plus local corporate taxes; source and MNE minimum-tax rules remain relevant.

Capital gains taxHong Kong

Hong Kong generally has no personal CGT, while Japan commonly taxes listed securities at 20.315%; trading income can be taxable in either jurisdiction.

Dividend taxHong Kong

Hong Kong generally has 0% dividend WHT, while Japan commonly withholds 20.315% on listed-share dividends and 20.42% on many unlisted dividends.

Inheritance taxHong Kong

Hong Kong has no estate duty for deaths after 11 February 2006; Japan's inheritance tax ranges from 10% to 55% after exemptions.

The verdict

Hong Kong salaries tax tops at 17%, compared with Japan's 45% national income tax plus local inhabitant tax and reconstruction surtax. Hong Kong profits tax is 8.25% on the first HKD 2 million and 16.5% above.

Hong Kong generally has no personal capital-gains tax or dividend withholding, while Japan commonly taxes listed gains and dividends at 20.315%. Hong Kong trading profits can still be taxable.

Choose Hong Kong for a source-based, founder-led hub with genuine offshore or local-source facts; choose Japan for a Japan-centred workforce and market. Substance, source, FSIE, CFC and treaty rules decide whether the paper advantage survives.

How to read this comparison

Hong Kong wins the headline tax comparison; Japan is the deeper domestic operating market. A Hong Kong structure needs defensible source analysis and real substance.

Frequently asked questions

Is Hong Kong or Japan lower tax?

Hong Kong is usually lower on personal income, company profits, dividends and capital gains. Japan can still be better when the business and workforce are genuinely Japan-based.

Are Hong Kong capital gains tax-free?

Hong Kong generally does not tax capital gains, but a disposal that is revenue or trading in nature can be taxable as profits. Source evidence and business substance matter.