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Hong Kong Corporate Tax

Updated:2018-4-17 17:26:38    Source:www.tannet-group.comViews:513

There are some basic requirements for Hong Kong Profits Tax. To be liable to Hong Kong Profits Tax, a company must meet three basic tests as set out by the Privy Council in the Hang Seng Bank case. These tests are:

1. The company must be carrying on a trade, profession or business in Hong Kong;

2. The company must be generating profits from that trade, profession or business of a type which are subject to Profits Tax, for example, trading profits or commission as opposed to non-taxable capital gains or dividends; and

3. Those profits must have a Hong Kong source.

Hong Kong Profits Tax Rate
The profits tax rate is 16.5% on assessable profits. All companies are subject to the same profits tax rate irrespective of their residential status. Fortunately, in Hong Kong's Chief Executive Carrie Lam Cheng Yuet-ngor "2017 Policy Address", she announced that the tax levied on the first HK$2 million profit posted by enterprises had been halved to 8.25 percent. She said a standard profits tax break of 10 percent as proposed in her Election Manifesto had been deepened but stressed that profits above HK$2 million would continue to be subject to the standard tax rate of 16.5%. However, attendant restrictions would ensure that each group of enterprises only nominate one enterprise to benefit from the lower tax rate.

Hong Kong Tax Return
Hong Kong Tax Return is refers to the reports filed with the department of the Hong Kong Inland Revenue Department containing information used to calculate the taxes and declare liability for taxation. Tax returns are generally prepared using forms prescribed by the tax authority.

Hong Kong Tax Return Requirements and Deadlines
The IRD of Hong Kong generally issues the corporate profits tax returns on the 1st of April every year. Normally, profits tax return should be filed within 1 month from the date of issue. The company has to file and complete the tax return together with the following supporting documents:

1. A certified copy of the Balance Sheet, Auditor’s Report and Profit & Loss Account pertaining to the basis period.

2. A tax computation with supporting schedules showing how the amount of Assessable Profits (or Adjusted Loss) has been arrived at.

3. Other documents and information as specified in the Notes and Instructions of the profits tax return.

Hong Kong is an ideal jurisdiction in which to incorporate a company with generates profits outside of Hong Kong. Hong Kong is officially a low tax jurisdiction which provides simple, certain and straight forward legislation. With proper planning, Hong Kong company which income is generates outside of Hong Kong is not subject to Hong Kong tax (offshore status application).

Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512, or emailing to 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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