FAQs on Accounting, Taxes & Auditing

Hong Kong company needs only to pay Profits Tax every year, which is calculated by 16.5% of the profits. The company without profits needs to pay no Profits Tax.

There are three kinds of taxes in Hong Kong taxation: Profits Tax, Salaries Tax and Property Tax. Profits Tax shall be 16.5% of the taxable profits of the company; Salaries Tax shall be calculated by salary income at progressive tax rate, and paid up to 15% of total salary income; Property Tax 15% of the net rent income earned from owning properties after deduction of 20% standard tax relief for renovation and expenditure.

The base period of assessment shall be one of the following periods:

• The year ended on 31 March or 31 December commonly
• The year ended by the end of another month as permitted

Donation granted to recognizable charitable organization is permitted to be deducted, but total donation as required shall not be less than $100 and not more than 35% of assessable profits.

Losses incurred in a taxable year can be carried forward and used to offset the profits of the company in subsequent years.

Profits Tax shall be levied according to the actual profits of the taxable year. Since the profits of one year shall be determined only after the end of year, Inland Revenue Department will levy provisional tax before the end of that year. After the profits of relevant year are assessed in the following year, the provisional tax already paid can be deducted from the Profits Tax payable of this year.

If the corporate profits do not arise from Hong Kong, and the company has not set up an office in Hong Kong nor hired Hong Kong employees, then its earned profits will be exempt from Profits Tax.

Yes. Because company incorporation is profit-oriented, even if the company in Hong Kong only performs the role of collecting and paying for others, it shall be deemed as agency service business, and its income shall be the commission for collection and payment for others.

No. According to Hong Kong laws, all Hong Kong company has the obligation to declare its financial condition to Inland Revenue Department, whether its business takes place in Hong Kong or not. If this company does not have its source of income in Hong Kong, it can apply to Inland Revenue Department for exemption from taxation.