| All Hong Kong-incorporated companies are required to keep their accounts. The accounts are to be audited on an annual basis. |
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| Profits Tax |
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A profit tax of 16.5% is payable on taxable profits occurring from activities taking place in Hong Kong. Business expenses incurred while earning the assessable profits are deducted.
The key to deciding whether a company’s profits are taxable in Hong Kong is decided by the location where the company’s activities are taking place. Profits earned from activities conducted outside Hong Kong will not be taxable even if the transactions are conducted through the company’s Hong Kong bank account.
A Hong Kong trading company having a bank account in Hong Kong would not be subject to Hong Kong taxes if: |
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The company has no physical office in Hong Kong and receives mail in our address. |
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The company has a functional office in overseas where it has appointed staffs. |
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The company has not appointed staff in Hong Kong, and its staff visits Hong Kong less than 60 days a year. |
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The company has no customers based in Hong Kong and does not receive payments from customers’ Hong Kong bank accounts. |
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The products of the company do not enter Hong Kong. |
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It is to be noted that a company’s activity in Hong Kong is a matter of fact, and not a matter of law. Hong Kong tax authorities may inspect a company’s claim that it has no activities in Hong Kong by checking a few random transactions to confirm the activities related to these transactions took place in Hong Kong or not. You are therefore advised to keep every record of such transactions including emails, itemised telephone bills (with the details of the numbers to which calls are made), travel receipts, passport copies, memos of meetings with customers and suppliers, purchase orders, sales orders, shipping documents, and the like.
Brooks Consulting has helped several overseas clients to benefit from the favourable tax system in Hong Kong. We help you from the initial planning of the corporate structure to the continuous monitoring of the business structure and activities to ensure that your company operate in a tax-free environment. |
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| Salaries Tax |
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| Salaries tax refers to the tax levied on an individual’s income arising from employment within Hong Kong. A sliding tax scale with a ceiling of 15% of taxable income exists in Hong Kong. Individuals are given different types of allowances and tax relief plans. If part of the duties of an individual is performed outside Hong Kong, apportionments may be used. It is important to have a professional tax planning to take advantage of the allowances and minimise the income subject to tax. |
