High rents and costly services can make Hong Kong difficult for Indian professionals. However, Arushi Sharma and her husband found that higher costs only tell half the story.
Speaking to Mint, the couple explained how salaries, taxes and government services balance their budget.
Sharma, 26, moved to Hong Kong in February to join 30-year-old Sai K. Araveti. Her husband had moved out the year before. Both worked in venture capital and Sharma has since launched a jewelry business.
At first, Sharma continued to convert all expenses into rupees. This made almost everything seem cheap compared to India.
A small apartment of about 300 square feet might cost ₹1.8-3 thousand per month. Gym or yoga classes can cost more ₹1400 per visit. Imported products also increase supermarket bills.
Mercer’s 2024 rankings list Hong Kong as the world’s most expensive city for foreigners. Mumbai, India’s highest ranked city, was ranked 136th.
The couple rents a 550-square-foot apartment. Their rent accounts for about 20% of a family’s income. Sharma sees this as reasonable locally, although the same cost could buy much more space in India.
Some young professionals, she said, spend half their salaries on rent. Public transportation helps the couple control other expenses. Their trips are worth it ₹80- ₹250. The subsidy also reimburses a portion of eligible monthly transportation costs.
Combined, utilities, food and commuting account for about 10% of their income. Imported fruits, dairy products and staple foods from India increase food costs.
Nearby noodle shops and local cafes offer reasonably priced food. However, trendy cafes, bars, salons and home help can seem expensive.
Public sports facilities provide a cheaper alternative to private fitness services. A visit to the swimming pool, for example, costs approx. ₹200.
Despite spending more, the couple maintains roughly their Indian savings rate. Sharma credits higher wages, lower taxes and lower inflation.
Career Opportunities in Hong Kong
According to Sharma, career opportunities in Hong Kong are greater in finance, banking and luxury retail. Finding work may become more difficult outside of finance or without Cantonese for locally focused positions.
Employer sponsorship usually supports work visas, while eligible dependents can usually work without separate sponsorship.
Sharma found a way to start her business quickly and primarily through the Internet. However, expensive offices and local administrative requirements complicate daily operations. So she runs her jewelry business mostly online.
Investments
The couple continues to invest in Indian markets through mutual funds and exchange-traded funds. About 40-50% of their portfolio is exposed to the US and Chinese markets through exchange-traded funds.
They strive to achieve financial freedom by age 45, supported by passive income and freedom from debt.
They are still undecided about whether to settle in Hong Kong. They want to explore other countries before having children and also appreciate the opportunities in India.
Tax rate: big differentiator
Hong Kong levies 15% income tax on individuals earning ₹6.09 crores or less. For others, the standard rate is 16%. However, this does not mean that people who earn ₹10 lakhs in Hong Kong salary ₹1.5 million in income tax.
The Hong Kong Inland Revenue Department (IRD) automatically calculates the applicable tax using two methods.
In a progressive rate system, tax is calculated on net taxable income after deducting personal allowances. It uses steps from 2% to 17%. The standard rate system charges a flat rate of 15%. The IRD automatically selects the system that requires individuals to pay lower tax.
Let’s assume that the couple earns ₹50 LPA. It is estimated that a couple pays approx. ₹3.57 lakh taxes in Hong Kong. For the same income they would pay ₹11 lakhs in India.
By staying in Hong Kong, the couple saves approx. ₹7.5 lakhs every year if they earn ₹50 LPA. If they earn more, their savings are likely to become even higher.