Hong Kong Taxation Formation Service
Hotline: 86-755-82147392, Email:info@citilinkia.com
Hong Kong is an established international commercial centre and ideally located for companies investing in and conducting business in Asia.
Hong Kong offers significant tax advantages including a simple tax regime, low rates of taxation and the opportunity to earn tax-free profits (see the section "Offshore Profits Tax Exemption" below) for companies engaging in international business activities.
HongKong Taxation----why conforamtion in HongKong
In summary Hong Kong is a credible location for international businesses seeking a tax friendly environment without the negative image of their company being incorporated in an offshore tax haven.
Taxation in Hong Kong
Hong Kong operates a simple taxation system with the following major taxes
Profits Tax - levied at the rate of 16.5% on profits arising from activities taking place in Hong Kong (and 0% on profits arising from activities taking place outside of Hong Kong).
Salaries Tax - levied at a maximum rate of 15% on an individual's income arising from employment within Hong Kong.
There are no sales taxes, no capital gains taxes and no withholding taxes on dividends.
It should be noted that taxation in Hong Kong is based on a territorial source principle rather than based on the residency of the tax payer. The effect of this principle is companies incorporated in Hong Kong only pay tax on profits earned from activities taking place in Hong Kong. If there are no activities taking place in Hong Kong then the company qualifies for an Offshore Profits Tax Exemption and there is no liability to tax in Hong Kong.
HongKong Taxation----why conforamtion in HongKong
Offshore Profits Tax Exemption
As highlighted above the location where a company's activities take place is the key to whether a company's profits are taxable in Hong Kong.
As an example a Hong Kong trading company with a bank account in Hong Kong would not be subject to Hong Kong taxes if
(a) The company has no physical operating office in Hong Kong (it is possible to use our virtual office service for receipt of bank statements and business mail and the company would not be viewed as operating in Hong Kong)
(b) The company has no staff resident in Hong Kong and its overseas staff rarely visit Hong Kong
(c) The company has an overseas office in which the company's staff are working
(d) The company negotiates and signs contracts with its customers and suppliers outside of Hong Kong
(e) The company has no customers based in Hong Kong and does not receive payments from customers Hong Kong bank accounts
(f) The company has no suppliers based in Hong Kong and does not make payment to suppliers Hong Kong bank accounts
(g) The company's products do not enter Hong Kong
If a Hong Kong company satisfies the above conditions it is able to apply for the Offshore Profits Tax Exemption when filing its annual Profits Tax Return.
HongKong Taxation----why conforamtion in HongKong
It should be noted the Hong Kong tax authority may seek to verify a company's claim that it has no activities taking place in Hong Kong. This would usually take place on a sample basis by the tax authority randomly selecting a transaction and reviewing the various activities involved in this transaction to determine where those activities took place. It is therefore advisable to keep complete records to illustrate the fact that all activities take place outside of Hong Kong including emails with customers and suppliers, faxes, notes of meetings with customers and suppliers, travel documents to demonstrate any visits to customers and suppliers, copies of sales orders, copies of purchase orders and copies of shipping documents to show the origin and destination of the product supplied to the customer. In summary the company should retain any document that assists the company to demonstrate the company does not engage in any business activity in Hong Kong.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to anitayao@citilinkia.com
ATAHK—A Sound Global Business Solution Partner, Serving the World of Business, Professionally & Reliably.