Is it legal to invest in Bitcoin in Hong Kong? Do I need to pay tax?

Jan 3, 2022

Hong Kong is a financial city in the world with a very developed financial system. It is also found that Hong Kong people are very interested in cryptocurrencies such as Bitcoin. The first question for those who are interested in investing in cryptocurrencies is is it legal to buy coins in Hong Kong? Do I have to pay tax if I have any income after selling the coins?

Is it legal to buy bitcoin in Hong Kong?

The answer is that it is legal at present, but you must continue to pay attention to whether the government's regulatory actions have affected your rights. The following is the attitude of Hong Kong regulators from the past to the present.

In the past few years, cryptocurrencies have been irrelevant to various financial regulatory authorities in Hong Kong. For example, the Hong Kong Monetary Authority (HKMA) has stated that cryptocurrencies including Bitcoin are virtual commodities, not legal tender or payment instruments, so they are not In their business scope, other units have also said that cryptocurrencies are not under their jurisdiction in the past, but in 2017 there was a different attitude, the Securities and Futures Commission (SFC) began to have regulatory requirements, and some cryptocurrency trading activities were in line with the " The two definitions of "securities" and "futures contracts" in the Securities and Futures Regulations . But only a few cryptocurrencies meet either of these two definitions, so the SFC requires only those intermediaries involved in actual securities and cryptocurrency-related activities.

In November 2020 and in May this year, the Hong Kong Bureau of Financial Services and the Treasury announced that a new licensing system will be added in the future to directly supervise cryptocurrency exchanges. As long as any platform that provides and sells cryptocurrency services in exchange for fiat currency must comply with the regulations. "Anti-Money Laundering and Anti-Terrorism Financing Regulations" (AMLO) and obtain a license from the Securities and Futures Commission (SFC) to operate, and in the future, retail investors may be prohibited from allowing only professional investors to trade, and retail investors will not be opened until the market matures. If this proposal is established In that case, Hong Kong will change from open to closed.

Do I have to pay tax on selling Bitcoin?

personal finance gains

The income from personal finance is tax-free. If you hold cryptocurrency and sell it to generate income, you do not need to pay any tax. On the contrary, you cannot apply for tax deduction for the loss.

Income from professional investment transactions

If you are a full-time trader, you have to pay income tax (income tax). Different income thresholds vary from 7.5% to 16.5%. The income threshold is about HKD 2,000,000, and the following is how to judge a professional trader.

No stable source of income, living only on profits from trading
spend a lot of time trading
Have an office and staff to support your trading business
Holding crypto assets for a fairly short period of time

Company operating income

As long as you are mainly a company or individual selling products or services in bitcoin and other currencies, you need to declare it as income on your tax return, and income generated in Hong Kong needs to be taxed in Hong Kong; income generated outside Hong Kong is exempt Taxes, but the problem is Bitcoin is borderless, how to define where this income is generated is a complex problem, if your company is registered in Hong Kong, encounter tax problems and want to propose that these profits do not come from Hong Kong , you need to provide a lot of proof, and these need to be consulted with professional accounting.

Mining income

If you are a POW miner, you are regarded as a producer of virtual goods, and you need to pay relevant taxes, but you can deduct mining expenses, such as electricity bills, facility maintenance fees, hardware and other expenses. As for POS, it is a bit more complicated, because the POS platform is regarded as a kind of security, and the income from pledge is somewhat similar to the distribution of dividends, and the distribution of dividends does not need to pay taxes, but the pledge cannot be sold publicly, and it is relatively traded. restricted.

The above is the information I have found, but if you are a large-amount investor, it is recommended to consult a professional tax officer for tax issues. As for whether cryptocurrencies will be strictly controlled in the future, this issue is complicated and involves political, financial and other issues, but people who have asked the Hong Kong currency circle do not seem to be too worried about legal issues. Please evaluate and consult others for your own opinion.