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FAQ of Hong Kong company tax
[Q] What is the situation with Hong Kong company taxation?
[A] Hong Kong benefits from a low tax rate and has a simple tax system which is one of the tax heaven in the world. Business profits are taxed each year with only a so-called corporate profits tax which is based on income, that is, a net profit of 16.5% according to the calculation. For example, with a business turnover for the year of 10 million, two million will be gross profit, and net profit will be 1 million. This company should be pay to the government of profits tax in one million X 16.5% = 165,000. If a company is not profitable, it does not need to pay tax.

[Q] How is the tax rate for Hong Kong companies calculated? How is the actual period for declaring dutiable goods defined?
[A] Hong Kong's tax rate is 16.5% (in 2009) based on actual taxable earnings. Normally Hong Kong companies take 31 March as the end of the financial year, and should arrange of each 12 months for tax returns.

[Q] Are the products comprising the business turnover of a Hong Kong company taxable?
[A] In addition to tobacco and alcohol, general goods from Hong Kong do not need to pay taxes. However, all import and export goods must clear customs declaration and pay charges based on the actual purchase price of 0.5% (47,000 Yuan or less) or 0.3% (47,000 Yuan or more).

[Q] What taxes need to be paid when establishing a company?
[A] The establishment of a local company is subject to stamp duty on the registered capital, i.e. the standard authorized capital is HKD10,000 and stamped duties is HKD10. Any additional authorized capital would need to pay one in a thousand (1/1000) for the stamp tax. So, the more the authorized capital, the higher the incorporation fee due to the stamp tax.

[Q] Which department produces the official company invoices and receipts?
[A] The invoices and receipts of a Hong Kong company are not printed by the tax office but are printed and issued according to the business nature of the company and by the board of directors of the company. So long as invoices and receipts and other documents bear a company seal, with authorized signatures of the company will be accepted.

[Q] Who handles the annual company accounting and how is that dealt with, and who verifies and declares taxable goods?
[A] RICHFUL can act on your behalf directly, you only need to provide us with the necessary information. We can act as agents for accounting, auditing and tax matters. The costs will be determined according to the actual workload, but we will charge the amount agreed between the two parties prior to starting any work and your consent will always be sought.

[Q] How does the Hong Kong tax system work?
[A] Revenue in Hong Kong falls mainly into three categories: - Property Tax, Salaries Tax and Profits Tax.

The property tax rate is only 15%, payable on the net assessable value of the property.

Salaries tax is based on the salary income at a progressive tax rate, with a ceiling of 15%, on the net assessable income before personal allowances.
The corporate profits tax rate applied to a company's taxable profits is 16.5% (in 2009). Taxable profit means the company's profits earned from business and operations in Hong Kong.

Many domestic customers have Hong Kong companies which do not actually operate in Hong Kong (for example, they do not set up offices in Hong Kong, have no office buildings and do not recruit employees), so they do not need to pay Hong Kong profits tax.

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