Taxation in Hong Kong

Overview of Hong Kong Taxation System
Hong Kong Taxation System is a simplified one compared with those of in other countries. The tax rate is quite low. There are 3 kind of taxes which is usually affect an individual and companies in Hong Kong. They are profits tax, salaries tax and property tax. Several distinctive features are as follows:

A) Territorial Source of Profit
Profits/income arise from Hong Kong is subject to Hong Kong profits tax. It means that profits generated from source outside Hong Kong is not taxable. A Hong Kong company can have "tax-free" profit if it makes profit outside Hong Kong.

B) No Capital Gains Tax
No tax is charged on the gain on sale or disposal of a capital asset

C) No Tax on Dividend Income
Dividend income is exempt from profits tax.

D) No Tax on Bank Interest Income
Bank interest income is exempt from profits tax.

Profits / Salaries Tax filing and Provisional tax payment
Salaries tax and profits tax return should be filed to tax authorities (Inland Revenue Department - IRD) annually. Individual can fill up their income tax return and filed to IRD in person or by mail.
However, limited companies in Hong Kong should hand over their profits tax return along with the audited account to the tax authorities annually. Management accounts without external audited are not accepted by tax authorities.
Both Profits Tax and Salaries Tax is levied annually. Tax payer should pay the tax of the current tax reporting year and the coming year (which is called Provisional tax). This provisional tax is used to estimate the income/profits of an individual or a company. So the tax liability would incorporate the tax liability of the current reporting year and the coming year. This provisional tax amount would be adjusted to the final tax reporting in the coming year results in tax payment/refund.

Tax planning
Our company has experienced staff who can help to do tax planning for your personal income and even your company in Hong Kong. We do have years of experience to complete tax filing and also the tax planning for their business.