Can I Claim Entertainment Expenses as a Business Expense in Hong Kong?
Entertainment is specifically disallowed by Section 17(1)(f) of the Inland Revenue Ordinance. Very limited exceptions apply, primarily for entertainment of overseas clients in connection with import/export trade.
What Inland Revenue Department (IRD) says
Section 17(1)(f) expressly disallows deduction of expenses for entertainment, including the provision of food, drink, tobacco, accommodation, amusement, recreation, or hospitality of any kind. The disallowance is absolute for domestic entertainment. A narrow exception exists for entertainment of customers outside Hong Kong for the purposes of import/export trade, with supporting documentation.
When you can claim
- Entertainment of overseas (non-HK) business contacts provided entirely outside Hong Kong in connection with export trade (narrow exception, requires detailed documentation)
- Staff meals at business conferences or training events where the primary purpose is business (treated as staff welfare, not entertainment)
When you cannot claim
- Client lunches, dinners, and corporate hospitality in Hong Kong
- Golf club memberships and sporting event tickets for client entertaining
- Staff Christmas parties and social events (classified as entertainment)
- Gifts of alcohol, food hampers, or tobacco to clients or business contacts
Good to know
Pro tip: Do not try to reclassify entertainment as 'staff welfare' or 'business meals.' The IRD is alert to this. Genuine staff training refreshments or working meals with a specific agenda may be defensible, but client-facing meals and hospitality should be budgeted as non-deductible. This is a hard-line rule in HK with almost no leeway.
Related expenses
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