Hong Kong is not an offshore jurisdiction

 

The normal corporate tax is 15,6% for resident companies. In order to get a 0% corporate tax, one has to file an exemption every year. This is really difficult to obtain this exemption and the HK government do encourage HK accountants to not suggest an exemption.

In fact, if you try to file for corporate tax exemption the HK tax authorities will investigate carefully. The person who applied for this exemption has to provide all the information to the HK Inland Revenue Dept. For instance, They may ask you for your personal tax statement or the tax statement of the holding company that owns the HK company, and if you are unable to provide it, they will apply the 15,6%

Lots of youtubers and bloggers incorporate in Hong Kong like “thesundancefamily”

Don’t be hasty!

In fact, you can’t be so happy when you incorporate a Hong Kong company because you didn’t pass the corporate tax exemption test and you didn’t pay the mandatory tax audit yet. In fact, if you want an opinion about Hong Kong, you have to find people who have a Hong Kong company since 2 years.

Wait don’t forget the mandatory annual tax audit!

It is also important to mention that tax audit is mandatory in Hong Kong from the 1 HK dollar of profit. Consequently, depending on the number of documents in your bookkeeping records the tax audit price may tremendously vary.

Here you can read a testimony of HK business owner on the course of 2 years. The testimony shows the real total cost of the Hong Kong company after 2 years including the tax audit and profits exemption claim (because it is not a free administrative procedure).

I also encourage you to take a look at this video from Laurent Timmermans related to this matter.

Conclusion:
Trying to get a corporate tax exemption triggers administrative procedure that is pricey with no guarantee of success. Furthermore, if your business setup is complicated and if you would have difficulties to justify your fiscal residency or the fiscal residency of your holding company, it would be better not to ask the tax exemption and go for 15,6%. Nevertheless, the tax audit is always mandatory in any cases.

Still with 15,6% of corporate tax and with less requirements than in Singapore, Hong Kong is the most interesting location to incorporate a company in Asia.

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