Hong Kong Tax System for Companies | International and Hong Kong Tax Services
The Hong Kong tax system is easy-to-understand and easy-to-navigate. A mayor difference of the Hong Kong tax system to the ta systems of many other jurisdictions is the fact that not all income types have to be taxed in Hong Kong. For this reason, the Hong Kong tax system makes Hong Kong an ideal stepping stone for a location for the development of business in Asia and especially China (PRC).
The Hong Kong tax system taxes companies based on the principle of territoriality. Generally, business profits from Sole Proprietorships, Partnerships, Limited Partnerships and personal income must be taxed at 15%, whereas incorporated companies like a Hong Kong Limited Company is taxed at the rate of 16.5% or only partially or do not have to tax their profits at all. According to the Hong Kong tax systems own principle of territoriality, only profits arising from or derived from Hong Kong are to be taxed locally. According to the Hong Kong tax system it is also up to the authorities to determine whether profits must be taxed or not. Companies may, if desired, have their tax status checked by the authorities by means of an application, in which case the answer to the following question forms an integral key:
Where is which action handled to conclude the Agreement/Transaction and to generate the profit for the Hong Kong Limited Company?
First, the Hong Kong tax system asks: Where was and from whom was the initial contact initiated and where and from whom was the largest part of the negotiation done which led to the subsequent conclusion of the agreement/transaction? The experts of Mühler McKay’s Hong Kong tax services team can address all important questions.
Conclusion of Agreement/Transaction:
Then the Hong Kong tax systems wants to know: Where was the actual Agreement/Transaction concluded? The experts of Mühler McKay’s Hong Kong tax services team can address all important questions.
Completion of Agreement/Transaction:
Lastly, the Hong Kong tax system asks: Where and from whom was the Agreement/Transaction fulfilled, and where and from whom were post-contractual services rendered? The experts of Mühler McKay’s Hong Kong tax services team can address all important questions.
According to the Hong Kong tax system transactions should only be tax free if business has not taken place in Hong Kong and there are no points of contact with Hong Kong. However, every start-up, every entrepreneur and very business owner should be aware of the fact that if nothing happens in Hong Kong, there will definitely be points of contact to third countries. These countries will likely try to tax these activities. Consultants advise such structures offensively and thereby conceal a possible tax liability in third countries, which in extreme cases can have criminal consequences. Accordingly, extreme caution is required. Start-ups, entrepreneurs and business owners should only work with experienced and, above all, serious consultants, which are capable of rendering sound international and Hong Kong tax services.
However, the Hong Kong tax system offers other advantages for entrepreneurs as well as investors. A possible exit from a business is tax exempt, since in Hong Kong profits from the sale of shares are not subject to taxation. There is also no taxation of interest income. There is also no VAT or GST. There is no foreign exchange control and no duties are levied except for tobacco products, alcohol, petrol and automobiles.
We, Mühler McKay, offer the full range of international and Hong Kong tax services in regard to the Hong Kong tax system:
- International and Hong Kong tax services
The international and Hong Kong tax services of Mühler McKay will advise and guide you to ensure that your entire business is tax efficient setup, as well as efficient from a commercial and financial perspective.
- International and Hong Kong tax services in regard of tax restructuring or corporate and business restructuring
In case that your business is not up-to-date in regard to its tax structure, then Mühler McKay’s international and Hong Kong tax services will advise you on implementing the necessary changes.
- Supporting services
Mühler McKay also provides supporting services for business operations such as assistance with incorporation services / company formation services, advising on tax efficient legal structures for (groups of) companies (corporations, for instance a Hong Kong Limited Company, partnerships, branches, representative offices), bookkeeping and accounting (according to Hong Kong principles) as well as audit arrangement, general corporate compliance like provision of company secretary services (in Hong Kong) as well as providing a registered address or virtual office in Hong Kong, obtaining obligatory registrations, permits and licenses, as well as employment advice, including Hong Kong work visa application and general international and Hong Kong tax services and general information on the Hong Kong tax system.
Our international and Hong Kong tax services rendered by experts cover personal Hong Kong tax services as well as corporate Hong Kong tax services and all related questions, locally in Hong Kong and internationally.
Please contact us or visit us in Hong Kong for your first consultation for our international and Hong Kong tax services or if you have questions in regard of the Hong Kong tax system.
Mühler McKay based in Hong Kong is a business advisory firm with worldwide reach and renders, among others, international and Hong Kong tax services to a diversified international client base from various industries and sizes.