The system of taxation in Hong Kong is relatively simple but many of the regulations are still difficult to comprehend. Our tax advisors who are experienced in taxation affairs of both individuals and corporations can assist you in reviewing your tax position and offering practical solutions to minimize you tax burdens.
Introduction to Hong Kong Taxation
Hong Kong taxation is based on a territorial tax system. This implies that income or profits will only be taxed if it arises in or derives from a source inside Hong Kong. Three distinctive taxes are levied to taxable income derived from Hong Kong: Profits tax, salaries tax and property tax. No sales tax, value-added tax or capital gains taxes are imposed. Estate duty shall be payable upon the principal value of property situated in Hong Kong which passes or is deemed to pass on the death of an individual to another person (Section 5 of Estate Duty Ordinance). Furthermore, stamp duty shall be levied on instrument concerning the transfer of various properties in Hong Kong.
Profits tax is currently levied at the rate of 16.5% on assessable profits for corporations and 16.5% for unincorporated business. All incorporated and unincorporated business organizations that engaged in trade, professions or business would have their relevant profits that derived from Hong Kong chargeable to profits tax.
Salaries tax is imposed on all income from an office or employment and pensions arising in or derived from Hong Kong. Normally no salaries tax will be levied for individuals who visit Hong Kong for periods of less than 60 days in a 12-months period. An apportionment may be used for individuals with foreign employment who have earnings derived inside and outside Hong Kong. Basic personal allowance for the year of assessment 2013/2014 is $120,000.00 for single and $240,000.00 for married persons respectively. Standard salary tax rate is currently15%.
Property tax is charged on the owner of any land or buildings situated in Hong Kong at the standard rate on the net assessable value of the respective land and buildings. Currently the standard rate is levied at 16%.
Stamp duty is a tax on instrument and as specified in S.4(1) of the Stamp Duty Ordinance, there are 4 headings which stamp duty are chargeable upon:-
· Head 1: Immovable property in Hong Kong,
· Head 2: Hong Kong stock,
· Head 3: Hong Kong bearer instrument,
· Head 4: Duplicate and counterparts
We provide a full range of taxation, advisory and compliance services including:
· Computing assessment for profits tax of corporation and salaries tax and property tax for individual,
· Compliance with filing requirements and taking over the responsibility of dealing with the Inland Revenue Department,
· Representing client in tax investigation and field audit cases,
· Rendering practical and timely advices on tax planning and consultancy,
Alerting clients to the latest tax development.