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The offshore tax claim – Hong Kong company

Your Hong Kong company might be asked to pay the Profit Tax Return however if you would like to request the Inland Revenue Department (IRD) for the tax exemption status, you should follow up these steps: Více

Hong Kong DTA – Double Taxation Agreement

Double Taxation Agreements(DTAs) in Hong Kong prevent double taxation and fiscal evasion, and foster cooperation between Hong Kong and other international tax administrations by enforcing their respective tax laws.  Only residents of Hong Kong or the other DTA jurisdiction will be affected by a DTA. Více

Hong Kong tax exemption – Limited Company

Startupr can introduce you to an accounting & auditing company. Here is an example of one of our client’s request & reply of a CPA firm.

 

1. For transaction of payments which I am receiving from my clients in China, Thailand, Vietnam and with payments to my corporate partners for providing the services, what will the taxes involved be for my company? The reason for asking is that I was informed that these transaction will not involve taxes in Hong Kong since the transaction did not happen in Hong Kong and the service provider are not from Hong Kong. So will appreciate your clearance on this.
2. With regards to the book keeping of my company account, does your team provide the service? And if so, what are the data I need to provide?
3. The expected turn around by year end is between 400,000 to 800,000 Euros, should there be taxes involved, what will the tax bracket be? And if you have any suggestion to keep it lower.
4. If I were to invest a good portion of the profit within the company into new ventures under the company name, will this help on the taxes should they be chargeable.
ANSWER:

1/ Yes, if all your business transactions (sales and purchase/ services) were negotiated and concluded outside HK; goods shipped not via Hong Kong, your company may apply offshore claim. IRD, the HK tax authority will send you a offshore tax queries letter (approx. 3-5 pages) and you required to reply with supporting documents such as your passport record, sample of full set of sales and purchase invoice and bill of lading, contract as well as relevant email correspondences. Once IRD approved your company is offshore, the company’s profit is not subject to HK profits tax.

2/ Yes, we shall provide you the book keeping, auditing and taxation services as well as the professional service for answering the offshore tax queries as mentioned in point 1.

If you use our services, generally you are required to provide us all bank statements, sales and purchase/ service invoices, all agreement and expenditure invoices/receipts. We shall then generate the management accounts for your approval before auditing.

3/ HK profit tax is calculated by 16.5% on the assessable profits for the year (e.g. year 2013/14) and on top there is provisional tax for next year(2014/15) by 16.5% on the assessable profit year 2013/14, that’s mean pay double.

However, as mentioned in point 1, if your company is approved offshore company, the profit is not subject to HK profits tax.

4/ I don’t understand well your question, would you please advise in details.

Before the engagement, there are some information that we would like to confirm with you as follows:

  • Your company is incorporated on 7/12/2009, your first audit and tax filing should be completed;
  • If, please provide copies of the latest audited financial statements, tax return and tax assessments for our reference;
  • How many transactions per year the company has during the period from the latest reporting period up to this financial year ended 31/3/2014 or 31/12/2013?

Once we received your documents & information, we shall then send you our fee quotation.

The basic principles to determine whether the salaries received is subject to Hong Kong Salaries Tax

As you are foreigner and under foreign employment of XYZ Limitd, the basic principles to determine whether the salaries received is subject to Hong Kong Salaries Tax as below:

 

1.      If you visit to Hong Kong no more than 60 days in a calendar year or no services rendered in Hong Kong, then the salaries is exempted from Hong Kong Salaries tax.

2.      If you visit to Hong Kong more than 60 days in a calendar year, you will subject to Hong Kong salaries tax based on the portion of number of day visit in Hong Kong.

3.      The personal allowance for the calendar year from 1st April 2012 to 31st March 2013 was HK$120,000 (if married person, the allowance was HK$240,000). Therfore, if your salaries during the said period was less than the mentioned allowance, no Hong Kong Salaries Tax would be payable.

4.      Simply, Hong Kong Salaries Tax payable is calculated at progressive rates on your net chargeable income or at standard rate on your net income, whichever is lower.

 

Progressive rate: 2% of first HK$40,000 received; 7% of second HK$40,0000; 12% of third HK$40,000 and 17% would be charged for the remaining portion).

 

Standard: 15%

 

For the payment to outsource companies, please provide the invoice/ agreement issued by the outsource companies as evidence.

 

Should you have any question, please feel free to contact us.

Hong Kong double taxation agreements

Hong Kong is not a traditional offshore centre  but rather a territory which offers a non discriminatory low tax regime based on “territorial principle” under which only income arising in Hong Kong is taxable in the jurisdiction.

Hong Kong has signed comprehensive double taxation agreements (DTA) with 55 countries, of which 53 are in effect. The agreements cover direct taxes, which in the case of Hong Kong are income tax, corporation tax and capital gains tax.

List of countries which sign DTA with Hong Kong might be found in here.

 

Please contact us for further information.