Can I Claim Motor Vehicle Expenses as a Business Expense in Hong Kong?
The business-use proportion of motor vehicle costs is deductible. There is no published IRD per-kilometre rate. Capital allowances apply to the vehicle purchase price on a 30% annual reducing-value basis.
What Inland Revenue Department (IRD) says
Section 16 allows deduction of vehicle running costs to the extent they are incurred for producing assessable profits. Section 39B and related provisions provide capital allowances (initial and annual) on qualifying expenditure on machinery and plant. Motor vehicles used partly for private purposes attract proportional disallowance. There is no official mileage rate.
When you can claim
- Petrol, tolls, and parking costs for journeys made wholly for business purposes
- Annual vehicle maintenance and servicing costs in proportion to business use
- Annual allowances on the vehicle purchase price at 30% (reducing balance, pool C) where vehicle is used for business
- Insurance and registration fees in proportion to business use
When you cannot claim
- The personal-use proportion of all running costs (petrol, maintenance, insurance)
- Fines and parking penalties
- Costs of a vehicle that is exclusively personal-use
- Depreciation calculated in the accounts (replaced by IRD capital allowances)
Good to know
Pro tip: Keep a mileage log or GPS record of journeys to establish the business-use percentage. In Hong Kong, where many directors do not own cars and use taxis, a motor vehicle claim by a sole director of a small company may attract scrutiny. Substantiate thoroughly.
Related expenses
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