Hong Kong Corporate Tax
Atrix provides comprehensive tax and business advisory services especially relating to Hong Kong tax regime. Our services cover Profits Tax, Salaries Tax, Property Tax, and Stamp Duty for both corporate and individual clients.
Hong Kong adopts territorial tax system. Profits tax shall be charged on every person carrying on trade, profession or business in Hong Kong in respect of the profits arising in or derived from Hong Kong from such trade, profession or business regardless of the nationality, domicile or residence of a person.
Under the general charging rules, only Hong Kong sourced income shall be subject to profits tax whereas certain income which would not be taxed in Hong Kong is deemed to be arising in or derived from Hong Kong from such trade, profession or business in Hong Kong. These income includes royalties received by a non-resident for the use of or right to use the intellectual property (“IP”) in Hong Kong or outside Hong Kong but the payer claim deduction on the royalties paid for profits tax purpose.
Expenses that are incurred in the production of chargeable profits are deductible and capital expenditure are generally not deductible except there are special tax relief for certain capital expenditure.
With effect from the year of assessment (“YOA”) 2018/19, the two-tiered profits tax rate regime is implemented in Hong Kong. The applicable tax rates are as below:
| Assessable Profits | Corporations | Unincorporated Businesses |
|---|---|---|
| First HKD 2 million | 8.25% | 7.5% |
| Above HKD 2 million | 16.5% | 15% |
However, for the purpose of anti-avoidance measure, each group of connected entities can only elect one entity within the group to benefit from the two-tiered tax rate for a given year of assessment.
Resident
Under the domestic law, the taxability of profits determined by
- whether the person is carrying on trade, profession or business in Hong Kong;
- whether the profits are arising in or derived from Hong Kong; and
- whether profits are generated from such trade, profession or business.
The residency of corporation is irrelevant.
However, under the comprehensive Double Taxation Agreements (“DTAs”), Hong Kong resident usually refers to a company incorporated in Hong Kong or a company incorporated outside Hong Kong but is normally managed or controlled in Hong Kong.
Tax treaties
Hong Kong currently has entered into 46 DTAs with the following jurisdictions:-
- Austria
- Belarus
- Belgium
- Brunei
- Cambodia
- Canada
- China
- Czech
- Estonia
- Finland
- France
- Georgia
- Guernsey
- Hungary
- India
- Indonesia
- Ireland
- Italy
- Japan
- Jersey
- Korea
- Kuwait
- Latvia
- Liechtenstein
- Luxembourg
- Macau
- Malaysia
- Malta
- Mauritius
- Mexico
- The Netherlands
- New Zealand
- Pakistan
- Portugal
- Qatar
- Romania
- Russia
- Saudi Arabia
- Serbia
- South Africa
- Spain
- Switzerland
- Thailand
- United Arab Emirates
- United Kingdom
- Vietnam
Our Services include
- Corporate tax compliance services including filing of tax return and computation
- Holdover application
- Objection to the assessment
- General business advisory services
- General international tax advisory services
- Reply to the queries from the Hong Kong Inland Revenue Department (“IRD”)
- Application for tax exemptions
- Application for Certificate of Residence Status in Hong Kong
- Advanced ruling application
For more information, please contact our tax team by e-mail to tax@atrixbiz.com.
Corporate Tax
Hong Kong adopts territorial tax system. Profits tax shall be charged on every person carrying on trade, profession or business in Hong Kong in respect of the profits arising in or derived from Hong Kong from such trade, profession or business regardless of the nationality, domicile or residence of a person.
Individual Tax
Hong Kong salaries tax is charged on every individual in respect of his/her income arising in or derived from any office, employment or any pension in Hong Kong. All income from a “Hong Kong sourced employment” is liable to tax irrespective of the locations for rendering the services, subject only to certain statutory exemptions.
Tax Investigation and Filed Audit Support
Hong Kong upholds simple tax system and its tax rate is one of the lowest in the world which requires a high degree of compliance of taxpayers. In order to protect government revenue, the IRD will review the submitted tax returns periodically by way of field audit and investigation.
Tax Policies in Hong Kong
Double Taxation Relief / Withholding Taxs / Advance Ruling in Hong Kong
/ Common Reporting Standard ("CRS") and Automatic Exchange of Financial Account Information ("AEOI")
/ Common Reporting Standard ("CRS") and Automatic Exchange of Financial Account Information ("AEOI")