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Tel：+86 400 118 5939Applying for exemption from offshore income tax means that the Hong Kong Inland Revenue Department agrees that the profits generated by the company belong to offshore income. According to Hong Kong tax regulations, when the profits generated by a Hong Kong company's business do not originate locally in Hong Kong (i.e. "local source" is not applicable), it can declare the situation to the Inland Revenue Department and apply for exemption from profits tax. In the following situations, Hong Kong companies can apply to the Inland Revenue Department for exemption from profits tax:
1. Conducting sales activities outside of Hong Kong, including obtaining, negotiating, and signing contracts and orders;
2. Purchasing outside of Hong Kong, including obtaining, negotiating, and signing contracts and orders;
3. Cannot establish an office in Hong Kong;
4. Cannot approve and confirm orders in Hong Kong;
5. Customers or suppliers' orders cannot be received/sent and processed in Hong Kong, or orders can only be received/sent and processed in Hong Kong after approval by management personnel outside of Hong Kong;
6. Neither the supplier nor the customer is a Hong Kong company or a resident of Hong Kong;
7. Cannot set prices, make decisions, or find suppliers in Hong Kong, and cannot hire employees in Hong Kong;
8. Cannot carry out promotional, advertising, advertising, sales and other activities in the Hong Kong market.
9. Cannot establish warehouses and store goods in Hong Kong;
10. Payment for goods can only be made and received after approval from management personnel outside of Hong Kong;
11. Quality monitoring cannot be conducted in Hong Kong;
12. The company needs to have complete documentation to prove the above conditions;
The above are the conditions required for the exemption of profits tax for registering a company in Hong Kong. In order to benefit from these increased conditions, it is necessary to meet these conditions when registering a company in Hong Kong.
In the process of applying for exemption from profits tax, directors of Hong Kong companies are required to hire accountants to conduct accounting audits for Hong Kong limited companies and request the company to explain its business operations and processes. After completion, the Hong Kong company will apply to the Hong Kong Inland Revenue Department for exemption from offshore income tax. During this period, the tax bureau will request various operational documents (including reports) from the company and tax representatives in writing, and make relevant inquiries and questions based on the company's situation. All questions raised by the tax bureau must be responded to within a certain period of time (usually one month). If the tax bureau agrees that the company's operations are offshore, an offshore exemption agreement will be issued. Generally, within two to three years after the tax bureau issues the exemption agreement, the tax bureau will not make any further inquiries to the company, but the tax bureau has the final decision-making power. Afterwards, the tax bureau will periodically require companies to resubmit documents every few years.
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