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Tel：+86 400 118 5939In recent years, Hong Kong companies have attracted more and more mainlanders to register companies in Hong Kong due to their unique advantages. After the establishment of a Hong Kong company, the most important tasks to maintain each year are annual inspection and taxation. According to Hong Kong law, as long as a Hong Kong company has opened a bank account, it is required to declare its business operations for the previous year, regardless of whether the company is required to pay taxes. It must report taxes every year! The newly established Hong Kong company will file taxes for the first time 18 months later, and will file taxes annually thereafter. What taxes should Hong Kong companies pay if they generate profits from their operations? What is the tax rate? Next, let's take a look together.
1. Profit tax
Similar to the corporate income tax of mainland companies, it can be simply understood as the company's income minus all costs minus all expenses, and only needs to pay profits tax if there is still profit.
2. Salary tax
Similar to personal income tax in mainland China, Hong Kong companies with employees are also required to declare personal income tax annually.
3. Property tax
If a Hong Kong company holds property and rents it out, the rented property needs to pay property tax.
Profits tax and salaries tax are tax forms that every registered limited company must receive, and upon receipt, they must be declared as mandatory learning items. Property tax is only applicable to companies with real offices in Hong Kong, usually paid by the lessor, and there are few opportunities for actual operation. In the actual operation process of Hong Kong companies, most enterprises only need to declare the following two types of taxes: profits tax and salaries tax.
The tax rates for Hong Kong company profits tax are as follows:
1. If a Hong Kong limited company's annual profit is within HKD 2 million, it only needs to pay a tax of 8.25% on the net profit;
2. If the annual profit of a Hong Kong limited company exceeds HKD 2 million, the first net profit of HKD 2 million shall be paid 8.25%, and the net profit exceeding HKD 2 million shall be paid 16.5%.
The Hong Kong Inland Revenue Department will have certain tax incentives policies every year. The tax incentives measures announced in the budget on February 26, 2020 are: a one-time reduction of 100% of profits tax, salaries tax, and personal income tax for the 2019/20 tax year, with a maximum of 20000 yuan per case.
It should be noted that Hong Kong companies pay taxes based on the principle of the source of profits, covering profits earned from operating any industry, profession, or business in Hong Kong. Profits generated from production, processing, and value-added activities in Hong Kong shall be subject to profits tax. In short, anyone who registers a company in Hong Kong but obtains profits from outside Hong Kong is not required to pay taxes in Hong Kong (can apply for overseas gains).
In summary, there are many factors involved in whether a Hong Kong company should pay taxes locally in Hong Kong. Even many business details may affect the final tax assessment results. Therefore, the initial accounting audit and tax planning of Hong Kong companies are crucial.
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