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+86 400 118 5939
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Tel：+86 400 118 5939The client is an overseas enterprise with game development and global distribution as its core. Establish a Hong Kong subsidiary through ODI filing as a global distribution platform. After several years of development, its Hong Kong company's annual revenue has exceeded HKD 200 million, with enormous growth potential.
⚠️ 2、 Risk WarningIn the annual audit, we found significant potential risks for the client - insufficient economic substance.
Although Hong Kong companies have a large scale, their actual operations and management decisions are carried out in mainland China, making them "structure holding" companies that have not formed local substantive operations.
This means: 💰 If questioned by the Hong Kong Inland Revenue Department, it will be difficult to enjoy offshore income tax exemption 📊 More seriously, if recognized as a "Chinese tax resident" by the mainland, their global income will be subject to a 25% corporate income tax
🛠️ 3、 Solution: From formal compliance to substantive operationWe propose a three-step strategic upgrade plan of "substantial implementation+tax resident certification+transfer pricing reconstruction"
1. Substantive business implementation 🏢 • Assist clients in setting up physical offices in Hong Kong and recruiting local finance and operations personnel 📋 • Standardize the board system to ensure that major decisions, contracts, and profit distributions are completed and documented in Hong Kong 💼 • Match business and fund flow, all core contracts and income and expenditure are executed through Hong Kong accounts
2. Apply for Hong Kong tax residency certificate 📜 • After the substantive conditions are met, we will apply to the Hong Kong Inland Revenue Department on behalf of the client for a Certificate of Resident Identity for Taxation 🛡️ • This document becomes the core proof for customers to prove their "Hong Kong tax resident status" to mainland tax authorities, effectively blocking the risk of "double taxation"
3. Reshaping the Transfer Pricing System 📈 • Establish transfer pricing policies that comply with OECD principles and regulations in China and Hong Kong 🤝 • Clarify the allocation of authorization fees and service fees between mainland R&D entities and Hong Kong distribution platforms to ensure reasonable pricing, traceability, and verifiability
🏆 Project achievements✅ Risk mitigation: completely avoiding the risk of being subject to a 25% corporate income tax imposed by the mainland ✅ Tax certainty: profits are clearly applicable to the two-tier Hong Kong profits tax system, costs are clear and controllable ✅ Strategic upgrade: Hong Kong companies transform from "shell structure" to "substantive operation platform", laying a solid foundation for global operations ✅ Continuous escort: Compliance and strategy go hand in hand to build a long-term sustainable tax defense system
💬 Customer feedbackIn the past, we only focused on business growth and had almost zero awareness of tax risks. Thank you for your team's professional insights and implementation of solutions. Now we can truly expand overseas markets with confidence. "- Vice President of Finance, Customer Group
📞 ConclusionIf your company also faces "economic substance deficiency" or "tax resident identification risk" in its overseas structure, please immediately initiate compliance and health checks to make your global map more stable and far-reaching.
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