Can I Claim Equipment and Computer Hardware as a Business Expense in Hong Kong?
Yes. Computer hardware and software and specified manufacturing plant and machinery can be written off in full in the year the cost is incurred. Other plant and machinery, such as office furniture and general equipment, gets a 60% initial allowance and then annual allowances at 10%, 20% or 30% on the reducing value.
Finn does your books in Hong Kong
AccountsOS keeps the books for Hong Kong businesses, tracks tax deadlines and handles expenses, in plain English. Ask Finn about yours, no signup needed.
What Inland Revenue Department (IRD) says
Hong Kong uses capital allowances, not accounting depreciation. The IRD allows a full deduction in the basis period in which expenditure on computer hardware and software, and on manufacturing plant and machinery, is incurred, based on section 16G. Other plant and machinery receives a 60% initial allowance on the cost, and then annual allowances at 10%, 20% or 30% as prescribed by the Board of Inland Revenue Rules, on the reducing value. Items qualifying for the same annual allowance rate are grouped in a pool.
When you can claim
- Laptops, desktop computers and workstations used for business: full deduction in the year of purchase
- Computer software purchased for the business: full deduction in the year of purchase
- Servers and network equipment for the business
- Office furniture, printers, scanners and telephone systems: 60% initial allowance, then annual allowances
- Specialist machinery or tools used in the trade, subject to the rate that applies to them
When you cannot claim
- Assets used exclusively for personal purposes
- Software subscription fees (these are revenue expenses deductible under Section 16, not capital allowances)
- Assets not owned by the company (rented or leased equipment may be deducted as rental expense instead)
Good to know
Pro tip: Buy computer equipment and software before the year-end to capture the full deduction in the current year. For other plant, keep the invoice, the date of first use and the pool the asset sits in.
Important: Expenditure on commercial buildings gets no initial allowance but an annual allowance of 4 percent for 25 years, and industrial buildings receive a 20 percent initial allowance and a 4 percent annual allowance. Land is never depreciable.
Related expenses
Stop guessing what you can claim in Hong Kong
AccountsOS automatically categorises expenses with Inland Revenue Department (IRD)-aware rules and tells you exactly what is claimable.
Try Free