Hong Kong

Hong Kong adopts a territorial source principle of taxation. Only income or profits which have a source in Hong Kong are taxable. The principle itself is very clear but its application in particular cases can be, at times, contentious.

The Hong Kong Inland Revenue Ordinance provides for the levying of three separate direct taxes for a year of assessment which ends on 31 March. The taxes are Profits Tax, Salaries Tax and Property Tax.

Profits Tax

Any persons, including corporations, partnerships, trustees and individuals carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits arising in or derived from Hong Kong from such trade, profession or business. The questions of whether a business is carried on in Hong Kong and whether profits are derived from Hong Kong are largely questions of fact.

Salaries Tax

This tax is imposed on all income arising in or derived from Hong Kong from an office, employment or pension. In deciding whether income “arises in or is derived from Hong Kong”, it is necessary to establish where the employment, i.e. the source of income, is located.

Property Tax

Property Tax is charged on the owners of land and/ or buildings in Hong Kong and is computed at the standard rate on the net assessable value of the property.

Except direct taxes, there are certain miscellaneous levies in Hong Kong, including stamp duty, betting duty, business registration. In addition to that, issues to be concerned may include anti-avoidance regulations and benefits and costs of obtaining advance ruling, etc.

If you have any concerns on your Hong Kong tax filings or tax planning strategies, please talk to our professional team.

 
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