HK Taxation & Exemption

It is Hong Kong Company Tax Reporting Season now. The Inland Revenue Department (“IRD”) has issued about 220,000 Profits Tax Returns in from April 2023. For no income, audited accounts have to be submitted to IRD with a Nil profits tax return from April 2023. Please ensure you comply with the new practice without delay. For the accounting, audit and tax compliance, please contact INTERSHORES to take immediate action and to avoid any government late penalties. Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or...

Hong Kong Tax return will be sent out after the first Q 2023. Be cautious in tax compliance. Herewith some prosecution cases for reference purpose: CASE 1 A businessman omitting company turnover and property rental income from the tax returns, contrary to Section 82(1)(a) of the Inland Revenue Ordinance. After trial, the Defendant was convicted on 7 October 2022 at the District Court. He was sentenced to 14 months’ imprisonment and was fined on 2 November 2022. CASE 2 The proprietress of an insurance agency business signed fraudulent tax returns overstating business expenses and making false claims for Additional Dependent Parent Allowances as well as signing fraudulent...

The Inland Revenue Centre, a new dedicated building at Kai Tak Development Area for the Inland Revenue Department of Hong Kong, will be opened for use in late 2022. A majority of the offices of Units/Sections of the Inland Revenue Department will be relocated to the new building phase by phase commencing from 19 December 2022 as follows: 19 Dec 2022 - Unit 4 Field Audit & Investigation 28 Dec 2022 - Unit 2 Individuals Tax 28 Dec 2022 - Unit 3 Collection Enforcement Section (for individuals other than partnership cases) 3 Jan 2023 - Unit 1 Profits Tax 3 Jan 2023 - Unit 3 Collection Enforcement Section (for corporation and partnership cases) and Inspection Section 9 Jan...

A comprehensive avoidance of double taxation agreement (CDTA) with Mauritius was signed on 7 November 2022, signifying the Government's sustained efforts in expanding Hong Kong's tax treaty network. This CDTA is the 46th agreement that Hong Kong has concluded. It sets out the allocation of taxing rights between the two jurisdictions and will help investors better assess their potential tax liabilities from cross-border economic activities, thereby promoting economic and trade connections between Hong Kong and Mauritius.Under the Hong Kong-Mauritius CDTA, double taxation will be avoided in that any tax paid in Mauritius, whether directly or by deduction, by Hong Kong companies in accordance...

The Court of First Instance (CFI) handed down a favorable judgement on the source of profits which held that booked profits are not subject to Hong Kong profits Tax. The case ruled that (1) the taxpayer did not carry on a business in Hong Kong and (2) its profits did not arise from commercial operations in Hong Kong. The profits are therefore offshore sourced and not chargeable to Hong Kong profits tax. The judegement upheld the principles of Hong Kong's territorial tax regime and reaffirmed the proper test for determining the source of profits as previously established. In summary, the case reaffirms the determining factor and considerations for determining the source of profits. ...

Q.1 Is an offShore company, i.e. one incorporated outside Hong Kong, liable to pay Hong Kong profits tax? A.1 The Inland Revenue Ordinance (“IRO”) contains no exemption from profits tax for offshore companies. Whether an offshore company is liable to profits tax depends on the nature and extent of its activities in Hong Kong. Q.2 Under what circumstances is an offshore company liable to profits tax? A.2 Generally speaking, a company is liable to profits tax if it carries on a trade, profession or business in Hong Kong and has profits arising in or derived from Hong Kong from such trade, profession or business. This applies equally to Hong Kong companies and those...

The low corporate tax rate and pro-business environment are the main reasons why business owners choose to start a business in Hong Kong. Ranked as the third easiest place to do business by the World Bank in 2020, it is a relatively straightforward process to set up a business in Hong Kong as it can be done remotely and there are no resident directors or minimum share capital requirements to set up an offshore company in Hong Kong. Before you setup offshore company in Hong Kong, it is important to understand the various Hong Kong offshore company tax your company may have to pay. What to know about Hong Kong offshore company tax? 1. Corporate income tax Hong Kong operates based...

The key tax rates in China and Hong Kong, including the corporate income tax, the withholding tax and individual income tax rate will be outlined below with tax treatment of these items. China's Standard Tax Rates China's Standard Tax Rate In % Corporate Income Tax Value-Added Tax Withholding Tax Individual Income Tax Dividend Interest Royalty Min. Max. 25% 3/6/11/17 10 10 10 3 45 Corporate Income Tax 1. Rate: 25 % 2. Residency: Companies are legal residents if they are established under PRC law, or if a foreign company’s place of effective...

Businesses and individuals in Hong Kong enjoy one of the most tax-friendly systems in the world. In summary, it is low, simple and competitive. Only three direct taxes are imposed and there are generous allowances and deductions which can reduce your taxable amount. The Three Taxes are: 1. Corporation - For limited company, profits tax for the first HK$2 million (approximately US$256,410) of profits of corporations is 8.25%. Profits above the amount will be subject to the tax rate of 16.5%. - For unincorporated business (i.e. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5 % and 15 %.. 2. Individuals- Salaries tax which has...

Hong Kong's tax system is reputable for its simplicity, transparency, and low cost, coupled with the free flow of funds and legitimate legal system etc. Hong Kong attracts many foreigners to do business in Hong Kong. This article briefly describes the features, advantages and problems of Hong Kong's tax system. Introduction of Hong Kong Tax System Hong Kong's tax system is divided into direct tax and indirect tax. Direct taxes are levied directly on taxpayers, while indirect taxes are levied on services or goods. There are three direct taxes in Hong Kong: profits tax, salaries tax and stamp duty. Indirect taxes include stamp duty, gambling tax, rates, business registration fees,...

Hong Kong adopts the territorial source of principle for taxation, that is, only profits derived from Hong Kong are taxable in Hong Kong, while profits derived from other places are not subject to profits tax. In short, even if a limited company is established in Hong Kong, it can apply to the Inland Revenue Department (IRD) for those "offshore income" not derived from Hong Kong to be exempt from Hong Kong profits tax when it submits its Hong Kong profits tax return. The IRD has not clearly stipulated the rulings for exemption of offshore income. The source of profits must be determined based on the facts of the relevant case, so there is no general rule that can be applied to all...