Can I Claim Travel and Transport Expenses as a Business Expense in Hong Kong?
Business travel is deductible; personal travel is not. There is no IRD mileage rate. Actual cost must be claimed and documented with the business purpose.
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What Inland Revenue Department (IRD) says
Section 16 allows deduction of travel expenses incurred wholly and exclusively for the purpose of producing assessable profits. The IRD does not publish a standard mileage rate. Actual costs (transport fares, hotel, per diem where justified) are claimable. The IRD specifically disallows personal travel costs. Mixed trips require apportionment. Hong Kong taxes only profits arising in or derived from Hong Kong, so a trip's cost is relevant to the Hong Kong profits only if the trip serves the Hong Kong trade. The burden of proof is on the taxpayer to show that each expense was incurred to produce chargeable profits. Records must be kept for at least 7 years under section 51C.
When you can claim
- Flights and accommodation for overseas business meetings, client visits, or trade fairs
- Taxis and public transport for journeys directly between business meetings
- Accommodation for staff on business travel
- Airport transfer costs for business trips
- Visa fees, travel insurance and baggage costs for business trips
- Exhibition booth fees at trade fairs abroad
When you cannot claim
- Personal holidays and leisure travel, even if combined with a business meeting
- Daily commute costs from home to the principal place of business
- First-class travel where the company cannot justify the premium over economy
- Costs for family members accompanying on business trips unless they have a business purpose
- Traffic fines and fees for private upgrades on a business trip
Good to know
Pro tip: Maintain a travel log for each trip: destination, dates, business purpose, meetings attended. For mixed business/personal trips, only the incremental cost of the business extension or the pro-rata business days proportion is deductible. IRD audits commonly focus on travel claims as a source of personal expense disguised as business.
Important: Travel for staff is also reported on the employee's return if it includes a private part. Business class or first class travel needs a justification, for example the length of the flight and company policy. Directors of small companies should set a written travel policy to avoid disputes over the private element.
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