Hong Kong is world renowned for its simple and low tax regime, making it one of the most business-friendly jurisdictions in the world. It's high level of inward and outward direct investment reflect its importance as a regional headquarters, business hub and international financial center.
Profits Tax
In Hong Kong, profits tax is an income tax chargeable to business carried on in Hong Kong. Applying the territorial taxation concept, only profits sourced in Hong Kong are taxable in general. Capital gains are not taxable in Hong Kong, despite it is always arguable whether an income is capital in nature. The persons chargeable to profits tax includes corporations, partnerships, trustees, and sole proprietors.
As a general rule, Hong Kong profits tax is levied on any persons who carries on a trade, profession or business in Hong Kong and assessable profits arising in or derived from Hong Kong for a year of assessment. The profits tax rate applied is 15% for individuals and 16.5% for corporations (which is expected to be 8.25% for the first two millions of profits in 2018).
Tax Incentives in Hong Kong
Hong Kong does not offer targeted incentive regimes to overseas investors or foreign-owned firms. However, its duty-free status, low tax rates, good infrastructure, freedom from government interference and substantial available capital make it attractive to potential investors, and thus competitive with other countries in the region. The simplicity of procedures for investing, expanding and establishing a local company is a major attraction for foreign investment in Hong Kong.
Consequences of Not Paying Tax On Time
Section 71 (1) of the Inland Revenue Ordinance (Cap.112) provides that tax charged under the provisions of this Ordinance shall be paid in the manner directed in the notice of assessment on or before a date specified in such notice. Any tax not so paid shall be deemed to be in default.
If the first instalment is not paid by the date specified on the notice of assessment, the second instalment will become immediately due. The entire balance of the total tax payable in the notice of assessment remaining unpaid shall be deemed to be in default and will be immediately recoverable.
The Commissioner of Inland Revenue will initiate recovery actions (including imposition of 5% surcharge on the entire balance of the demand notice, issue of recovery notice to third party and initiation of legal action, etc) as authorized by Part XII of the Inland Revenue Ordinance for recovering the total outstanding amount.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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