FAQ for Taxation in Hong Kong

FAQ for Taxation in Hong Kong

What is the corporate tax rate in Hong Kong?

For Offshore company, the corporate tax rate can be 0%. For Onshore company, the corporate tax rate is 8.25% for the first 2 million of profits. For the rest of the profits, the corporate tax rate is 16.5%.

Does Hong Kong have capital gain tax?

No. Hong Kong does not have capital gain tax.

Does Hong Kong have Value Added Tax (VAT)?

No. Hong Kong does NOT have value added tax (VAT). Hong Kong is one of the easiest places to start a business in the world.

Are Dividends taxable in Hong Kong?

No. Dividends are not taxable in Hong Kong.

For onshore companies, what are deductible expenses?

In general, all outgoings and expenses that help your company to generate chargeable profits are allowed as deductions, except for expenses of a domestic or private nature and capital expenditure.

Can you give an example of what is a deductible expense?

For example, office rent is a deductible expense. Flight tickets for a business trip is a deductible expense. Employees’ salary is a deductible expense.

Can you give an example of what is a domestic or private nature?

For example, travel expense to your friends’ home is a domestic/ private nature. Entertainment with friends or family members are also classified as private nature. In order for an expense to be deductible, the expense must be related to your business.

What is the corporate tax rate for Offshore companies?

The Corporate tax rate for Offshore companies is 0%. Hong Kong adopts a territorial source principle of taxation. Only profits, which are generated in Hong Kong, are taxable by the HK Government. Profits generated outside Hong Kong are not subject to Hong Kong Profits Tax. 

Is it easy to be classified as an offshore company?

Offshore status is based on a matter of fact. There is no magic in getting the offshore status. Company owner just needs to present the facts to the Inland Revenue Department. As long as you do not have customers, suppliers and employees in Hong Kong, your company will be classified as an offshore company. For details, you can contact our accounting team at info@getstarted.hk.

If I intend to operate an offshore 0% tax company, can I still have a bank account in HK?

Yes. Banks are NOT classified as supplier. Having a Hong Kong bank account does NOT affect the offshore status.

If I intend to operate an offshore 0% tax company, can I still have a bank account in HK?

Yes. Banks are NOT classified as supplier. Having a Hong Kong bank account does NOT affect the offshore status.

I operate an offshore company. 99% of my profits are generated outside HK. What will happen if I bill a HK customer by mistake? Is there any way to rectify the problem?

If your offshore company bills a HK customer by mistake, we can help to arrange a partial offshore status.

Can I pay myself a director’s fee? Do I need to pay personal tax in Hong Kong?

Yes, you can pay yourself a director’s fee on a monthly or annual basis. Given the offshore status of your company, your director’s salary is not taxable in Hong Kong.