FAQs of Profits Tax

Q: What kind of tax is Hong Kong Company subject to pay annually?

A: Hong Kong Company is subject to pay Profits Tax every year, which is calculated by 16.5% (2007/08:17.5%) of the profits. Companies without taxable profits do not need to pay any tax. Any tax loss derived can be carried forwarded to next year.

Q: What year end is used by Hong Kong company?

A: There is no restriction on the date of year end but generally 31 March, 30 June and 31 December are most commonly used. Hong Kong company has maximum 18 months for the first year's basis period of taxation.

Q: How can the firm help me to process filing of tax returns if I don’t know anything on accounting?

A: The firm will arrange book-keeping services to you. After the financial statements and the supporting schedules are available, we will provide auditing services and the tax computation service to you. Those documents will then be filed with the filed tax return for submission to Hong Kong Inland Revenue Department.

Q: What is the scope of Hong Kong taxation?

A: There are three kinds of Hong Kong taxation: Profits Tax, Salaries Tax and Property Tax.
Profits Tax shall be 16.5% (2007/08:17.5%) of the taxable profits of the company; Salaries Tax shall be calculated by salary income at progressive tax rate, and paid up to 15% (2007/08:16%) of total salary income; Property Tax 15% (2007/08:16%) of the net rent income earned from owning properties after deduction of 20% standard tax relief for renovation and expenditure.

Q: My Company only has a bank account in a foreign bank in China and does not have any bank account in Hong Kong; Is the Company free from any Hong Kong profits tax declaration?

A: No. According to Hong Kong laws, every Hong Kong Company has the obligation to declare its financial situation to Inland Revenue Department, regardless of its business taking place in Hong Kong or not. If this Company considers it does not have the source of income in Hong Kong, it may apply to Inland Revenue Department for exemption from any taxation.