A Quick Guide to HongKong Taxes by Hong Kong Company Registration Agency

A Quick Guide to HongKong Taxes by Hong Kong Company Registration Agency

The simple way to think about Hong Kong taxes is that they are the lowest in Asia and one of the lowest in the world. The rise of business and prosperity is partly due to their tax system and the way that it encourages commerce and business. Many companies are relocating and taking advantage of the tax savings that they can obtain.

Personal Income Tax

Your employees will benefit from the low tax rates, also. For example, a person that makes $40,000 a year or less is only subject to a two percent income tax. Between 40 and 80 thousand the tax rate is only seven percent. Between 80 and 120 thousand the rate is 12 percent. The most you will have to pay is 17 percent.

There are other advantages, also. If you have income from foreign sources it is not be a part of your taxes in Hong Kong. If you sell property and make a large profit, you will not to have to pay a large capital gains tax. In fact, there is no tax on capital gains in Hong Kong.

Suppose one inherits a large amount of money in Hong Kong. This money will be tax free as there is no tax on inheritance.

In most countries, you will need to invest your money to keep from paying a substantial tax on dividends. In Hong Kong, you can have a large amount of money in a bank account and enjoy the interest. There is not tax on it. This can be a huge savings for some people as many countries see dividend payments as income.

Corporate Hong Kong Taxes

The corporate taxation is very easy and simple to understand. The tax rate is a flat 16.5 percent. However, there are many ways to receive tax exemptions.

Corporate taxes are not multi-tier like many countries. They work on a single-tier system. For example, company profits or gains are only taxed one time. Shareholders do not have to pay tax on company profits that have already been taxed.

Audits

Not all companies will have to concern themselves with tax audits. This is very good news for smaller companies that have net income of half a million or less, per year.

Companies that are considered dormant will not be audited. Many company branch offices will not be audited, either.

Exemptions

Many companies will enjoy different tax exemptions. For example, money that is spent on manufacturing concerns may be completely exempt. This includes any type of equipment for manufacturing. It also includes computers and related hardware and software.

Many businesses may need to update, refurbish, or improve their business. They will receive a write off for these costs. The write offs will be over a period of five years.

Summary

Hong Kong taxes feature a simple and easy to understand structure. Personal and corporate taxes offer many benefits to businesses and their employees. Many companies will not have to worry about problems associated with tax audits. There are also exemptions that make improvements and updates, very attractive. Taxes in Hong Kong are only one reason to consider incorporating there.

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