Process Offshore Operation Tax Exemption
Offshore income claim is not automatic. It needs to be applied.

It can be done by 2 ways :
  • Advance Ruling
    • Before you start the operation, write to HK tax department (IRD), describe your intended operation and request for "Advance Ruling";
    • Example of advance ruling = [ Example ]
  • Tax Filing
    • 1 st filing request will normally issued by tax department around 18 months after company incorporation date;
    • Usually the company has around 3 months to handle the filing;
    • The period to cover is usually from incorporation date to 31/3 of next year;
    • Therefore, the company can also start arranging the filing work - even the filing request is not issued yet.
    • What documents are required for Tax Filing ?
Item 1 : Financial Statements;
Item 2 : Auditor’s Report
Item 3 : Tax computation
Item 4 : Offshore operation tax exemption application

For a company does not need to apply for tax exemption, only Item 1 , Item 2 and Item 3 are required to submit to Hong Kong tax department.

When tax exemption application is required, Item 4 is required as well.

In Item 1 , all income (onshore and offshore) of the taxpayer company should be reported.

In Item 2 , statutory audit is required for every limited companies incorporated in Hong Kong;

In Item 3 , tax payable needs to be calculated according to tax rules in HK;

In Item 4 , at least below 2 document sets are included :

  1. Organization chart (Company function structure) showing which function is performed offshore
  2. Walk-Through document example of a deal showing how an offshore income business is handled. (please select one of the largest in amount and typical);

If apply for tax exemption without giving sufficient information. Tax department will issue a letter asking for proof. [ Document Sample ]