By Victor Tu
Some clients often inquire me about the tax in Hong Kong when they enter into the Asian market or some Chinese businessperson expanding their business to the global market. Today we will take a look at the brief HK tax.
In Hong Kong, the full name of the tax bureau is called Inland Revenue Department (IRD), the government of The Hong Kong Special Administrative Region. IRD is a name like the US tax bureau in terms of the abbreviation, Internal Revenue Service (IRS). Basically, Tax is the revenue of the government, they collect it from the people and use it for the people.
According to the Inland Revenue Ordinance (Chapter 112) (IRO), there are only three direct Taxes, Profits Tax, Salaries Tax and Property Tax in Hong Kong. The tax year is from April 1st to the March 31st next year. Of course, there are miscellaneous taxes including Stamp Duty, Estate Duty (abolition from 11 February 2006), Betting Duty, Business Registration, and Hotel Accommodation Tax.
General speaking, the tax structure in Hong Kong is simpler and clearer than that in other developed countries or mainland China.
Since most clients are concerned about the Profits Tax in Hong Kong, we will discuss it in more detail in this article.
So far, the Profits Tax for corporations in Hong Kong is 16.5% (from year 2008/2009) and if it is run under offshore model, it could probably apply for the tax exempt, because the territorial concept has always been fundamental to the taxation of profits in Hong Kong. Only those profits which arise in or are derived from Hong Kong are liable to tax there.
Once you are going to apply for the offshore operation tax exempt, you have to collect the all documents i.e. purchase and sales contracts, invoices, lease contracts, employment contracts, professional service contracts, bank statements etc. These documents could prove that the Hong Kong company is run on offshore and No hiring a local Hong Kong Staff, leasing a property in Hong Kong, no suppliers or customers from Hong Kong etc. In most cases, if the IRD is skeptical about the application, they will send the company an Inquire Letter to ask for the above mentioned documents as well as some questions you need to answer.
For more questions regarding Hong Kong tax, please feel free to contact me on firstname.lastname@example.org or cell phone on 139 5786 1900. Thanks.
Keywords: Ningbo accounting, Ningbo Auditor, Ningbo accountants, Ningbo CPA
Victor & Truman，CPAs 宁波纬度会计师事务所（普通合伙）