Tax Compliance Services in Hong Kong

Corporate profits in Hong Kong are taxed under a two-tier system. Corporations pay tax at 8.25% on the first HKD 2 million of assessable profits and 16.5% on the remaining amount. For unincorporated businesses, the applicable rates are 7.5% and 15% respectively, depending on profit levels.

No, Hong Kong follows a territorial tax system. This means only profits that arise in or are derived from Hong Kong are subject to tax, while foreign-sourced income is generally not taxable.

Hong Kong does not impose VAT or GST, capital gains tax, or estate duty. In most cases, there is also no withholding tax on dividends or interest, making the tax system relatively simple compared to many jurisdictions.

Taxation in Hong Kong is administered by the Inland Revenue Department (IRD) under the Inland Revenue Ordinance (IRO), which governs all tax-related laws and compliance requirements.

A Profits Tax Return is the annual filing submitted by businesses declaring their assessable profits. The form used depends on the type of entity, such as BIR51 for corporations, BIR52 for partnerships, and BIR54 for non-resident entities.

The IRD typically issues Profits Tax Returns on the first working day of April each year. The standard deadline is around one month from issuance, although extensions may be granted under the Block Extension Scheme depending on the company’s financial year-end.

Yes, most Hong Kong companies are required to prepare audited financial statements certified by a Hong Kong Certified Public Accountant. These audited accounts are essential for supporting the Profits Tax Return filed with the IRD.

A newly incorporated company in Hong Kong typically receives its first Profits Tax Return from the IRD about 18 months after incorporation, marking the start of its tax filing obligations.

Provisional profits tax is an advance tax assessment based on the previous year’s profits. This amount is paid in advance and later adjusted when the final tax liability is assessed for the relevant year.

An offshore profits claim is made when a business asserts that certain profits were earned outside Hong Kong and should therefore not be subject to taxation. Such claims require detailed documentation and may involve scrutiny by the IRD.

The Employer’s Return refers to forms such as BIR56A and IR56B, which employers must file to report employee remuneration. These returns are generally issued in April and must be submitted within the prescribed deadline, usually around one month.

Yes, Hong Kong has implemented the BEPS 2.0 framework for large multinational enterprise groups with consolidated revenue of EUR 750 million or more. A 15% global minimum tax and domestic minimum top-up tax apply for accounting periods starting on or after 1 January 2025.

Tax filing in Hong Kong requires several key documents, including business registration details, audited financial statements, tax computation schedules, accounting records such as invoices and bank statements, payroll records, and any supporting documentation for offshore claims or deductions.

Non-compliance with tax obligations in Hong Kong can lead to various consequences, including penalties, surcharges, estimated tax assessments, interest charges, and in more serious cases, legal prosecution by the Inland Revenue Department.