How to Save Taxes When Trading Hong Kong and US Stocks?

Nowadays, after CRS implementation, trading Hong Kong and US stocks incurs a 20% tax. If you earn 1 million, you pay 200,000 in taxes. However, there are legal and legitimate ways to reduce this tax burden through strategic operations.
According to regulations, trading Hong Kong and US stocks now involves "Capital Gains Tax" and "Dividend Tax."
- Capital Gains Tax: 20% on the profit from stock buy-sell spreads (subject to active declaration; after CRS implementation, usually you are called to pay via phone)
- Dividend Tax: 10% on stock dividends (withholding by the broker)
Many beginners in Hong Kong and US stocks are unaware of these pitfalls. Dividend tax is calculated separately and cannot be offset against gains and losses.
For example, in 2026, you buy Stock A and earn 1 million, buy Stock B and lose 1.5 million, and buy Fund C which pays 500,000 in dividends. Overall, you break even.
But in reality, the 500,000 dividend income must be taxed separately and cannot offset gains and losses. Therefore, you need to pay an additional 10% on the dividend, which is 50,000 in dividend tax.
This can be quite frustrating—your account shows no profit, yet you still owe taxes.
However, dividend tax can actually be avoided.
For example, when buying the "S&P 500," most people choose VOO or SPY, which pay about 2% annual dividends. Regardless of your account's profit or loss, you must pay dividend tax on this.
But if you choose to buy the same S&P 500 tracking ETF, CSPX, the situation is different. This ETF does not pay dividends directly but instead reinvests the earnings into the net asset value, effectively avoiding dividend tax.
The same logic can be applied to other funds, such as short-term US Treasury funds like SGOV / BIL, which are less tax-efficient compared to BOXX.
In summary:
Buy net asset value (NAV) accumulating funds, not dividend-paying funds.
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