What is the Expense Reimbursement policy in Hong Kong?



Modified on: Thu, 22 Jan, 2026 at 5:44 PM

This article explains how business expenses are reimbursed in Hong Kong, which costs may be treated as non‑taxable, and what documentation is required to comply with Inland Revenue Department (IRD) standards.


1. Mileage Reimbursement in Hong Kong

Hong Kong has no statutory or government‑set mileage reimbursement rate.


Common Company Mileage Rates

Employers typically use internal rates of:

  • HKD 3–6 per km

Mileage may be reimbursed tax‑free when:

  • The rate is reasonable, and
  • The employee maintains a mileage log documenting:
    • Date of travel
    • Kilometres driven
    • Purpose of the trip


When Mileage Becomes Taxable

If the mileage rate is excessive, the excess amount may be treated by the IRD as taxable employment income.


2. Receipt Requirements (General Rule)

In Hong Kong, expenses reimbursed without receipts are typically taxable because the employer cannot demonstrate that the cost was:

  • Wholly
  • Exclusively
  • And necessarily for business
    (IRD’s strict test)

Employees should always submit original or digital receipts showing date, amount, vendor, and business purpose.


3. Business Travel Expense Rules

Hong Kong does not impose statutory limits on travel expenses. However, the IRD requires that expenses be:

  • Wholly, exclusively and necessarily incurred for business
  • Reasonable
  • Properly supported with documentation


Transportation Receipt Requirements

Receipts must be provided for:

  • Air travel
  • Train, MTR, intercity rail
  • Bus and public transit (where receipts are available)
  • Taxi
    • Taxi receipts (“taxi slips”) are acceptable even if handwritten or simplified
  • Ferry
  • Rental cars
    • Requires:
      • Rental contract
      • Fuel receipts
      • Parking/toll receipts


Cash expenses without receipts are usually taxable.

There is no government restriction on travel class (e.g., economy vs. business), but the company must justify premium classes as business‑necessary.


4. Documentation Required for Tax‑Free Reimbursement

To keep a reimbursement non‑taxable, employees must submit documentation proving the business nature of the cost, including:

  • Merchant receipt or invoice
  • Date of transaction
  • Amount paid
  • Description of item or service
  • Clear business purpose
  • For travel:
    • Hotel folio
    • Flight ticket
    • Boarding pass
    • Itinerary


No Tax ID Requirement

Hong Kong does not have VAT/GST, so:

  • No tax registration number is required on receipts
  • Standard merchant receipts are acceptable


5. Reimbursable vs. Taxable Expenses

Examples of Tax‑Free Reimbursable Expenses (with documentation)

  • Business transportation (taxi, public transit, mileage, tolls, parking)
  • Airfare and hotel accommodation
  • Business‑meeting meals
  • Client entertainment and marketing events
  • Work‑related supplies
  • Mobile/internet costs used for work (with pro‑rated calculation)

The IRD uses a strict standard: the expense must be wholly, exclusively, and necessarily for business.


Non‑Reimbursable or Taxable Personal Expenses

Generally taxable because they are personal benefits:

  • Gym/fitness memberships
  • Wellness or sports activities
  • Personal entertainment
  • Personal medical costs (unless employer‑mandated or statutory)


6. Per Diems in Hong Kong

Hong Kong has no official government per diem rates.

Employers may set internal daily allowances, but:

  • Per diems are tax‑free only if supported by receipts for actual expenses.
  • They become taxable allowances if:
    • Paid as a flat daily amount
    • No receipts are provided
    • The employee keeps the unused balance


7. Business Entertainment & Gifts

Business Entertainment

  • Meals with clients or business‑related events
  • Non‑taxable when supported by receipts and business purpose


Gifts

  • Modest client gifts: non‑taxable with receipts
  • Gifts to employees:
    • Large or valuable gifts may be taxable as a benefit



8. Record‑Keeping Requirements

Under IRD rules, employers must keep expense records for 7 years, including:

  • Receipts
  • Expense claims
  • Business justification
  • Approvals

Personal‑appearing expenses are often treated as taxable benefits.

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