Hong Kong adopts a territorial source principle of taxation. Only profits which have a source in Hong Kong are taxable here.

Profits sourced elsewhere are not subject to Hong Kong Profits Tax. Offshore income claim is not automatic. It needs to be applied.

If your business activity is not within and not related to Hong Kong. You can apply Tax Exemption and it can be done by 2 ways :


Sample case : No tax in Hong Kong - Offshore operation tax exemption

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Hong Kong 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 ]
  •   The fee for this starts from around HKD 60,000.

Tax Filing
  •   1st 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?

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.

Item 1 : All income (onshore and offshore) of the taxpayer company should be reported.
Item 2 : Statutory audit is required for every limited companies incorporated in Hong Kong;
Item 3 : Tax payable needs to be calculated according to tax rules in HK;
Item 4 : At least below 2 document sets are included :
  •   Organization chart (Company function structure) showing which function is performed offshore
  •   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)
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