Hong Kong has been the hub for savvy entrepreneurs in these recent years. Before you start a business in Hong Kong, you should investigate and know about the laws, regulations, tax system in Hong Kong, acts, and guidelines of the country. 3E Accounting Limited is a Hong Kong accounting firm that provides incorporating service, accounting services, secretarial services, and all the information that concerns how to survive and flourish your business.

Taxation In Hong Kong

The tax in Hong Kong is levied to only those trades and business operations that are carried out inside the country or the office that has its primary address in Hong Kong. The taxes are charged mainly on profit taxes, property taxes, and salary taxes.

Profit tax

The corporate that generates a profit of HK$2 million levies the tax rate of 8.25% and for those business firms that generate a profit of more than HK$2 million, the payable taxes is 16.5%. There are two different rates of taxes for the unincorporated business. For sole proprietorship, it’s 7.5% and for partnerships, the tax rate is 15%.

Property tax

The specified standard tax rate for property tax is 15%.

Salary tax

The tax rate is between 2-17%. Yet, the specified payable tax is 15%. The salary tax is levied only on those individuals that generate income by engaging in an office located in Hong Kong or pension holders.

The individuals that are self-employed are obliged for profit taxes.

These different taxes charged by the Hong Kong administration are relatively lower than that of other countries. Also, the country doesn’t impose taxes on capital gains, withholding taxes, VAT, dividend tax, and estate tax. These are the major attractions for entrepreneurs to invest in Hong Kong.

The country offers various deductions in taxes and allowances that decrease the payable amount of tax. HK secretarial services take responsibility for all the matters relating to your business and ensure compliance with the laws of company acts and allow trouble-free commercial activities.

Recording & Filing Taxes

The inland revenue department of Hong Kong issues a profit tax return to file and maintain the corporate tax of the company. The company should usually file the tax and maintain the accounts within one month once they reach the end of the financial year.

The employees charged with salary tax should file an annual tax return to the inland revenue department each year. IRD issues personal tax returns that should be filed within one month of its issuance. It should be filed in both cases: either you’re earning over the years or not.

The company that is newly established receives profit tax returns after 18 months of incorporation. The company usually has a 3 months period to maintain and file the profit tax returns. If the company fails to file these profit tax returns on time, the inland revenue department of Hong Kong charges for late penalties.

Application For Tax Exemption

You need to provide some documents for tax exemption if you are working outside the country. These documents are the consultation notes with vendors and clients, organization charts, address and details of the business activities operated offshore, receipts of travels, expenses, copies of passport along with the date of foreign visit, shipping documents, sales order, purchase order, emails, telephone bills, etc. These documents serve as evidence of your offshore work.