Hong Kong offers entrepreneurs a minimal tax burden.

Income from foreign sources is not subject to corporate income tax, even if it is transferred to Hong Kong.

Where a company’s income derives from sources and activities in Hong Kong, that income is taxed at 16.5%.

Hong Kong boasts excellent infrastructure, with a first-class modern telecommunications network and superb transport links. It provides businesses with a highly professional environment.

For companies looking to grow on the back of low taxation, Hong Kong is the ideal place to do business, whatever their ambitions.

Hong Kong has no foreign exchange controls.

With our services, setting up a company in Hong Kong is straightforward, and we will be delighted to help you.

Understanding the Hong Kong Tax System

Hong Kong has long been regarded as one of the most attractive places in Asia to run an international business. Its tax system is relatively simple, the number of taxes is limited and the rules are generally predictable. For entrepreneurs from the UK and Europe, it can be a practical base for trading with mainland China and the wider region.

The Territorial Principle

The key feature of the Hong Kong system is that profits tax is charged on profits arising in or derived from Hong Kong. Whether profits are treated as sourced in Hong Kong depends on the facts, such as where contracts are negotiated and concluded, where services are performed and where the core operations take place. Determining the source of profits is not always straightforward, and in recent years certain rules on foreign-sourced income have been refined, so each structure should be assessed individually.

Other Advantages

  • No general sales tax or VAT
  • A free flow of capital, with no exchange controls
  • A well-developed banking and financial sector
  • English widely used in business and law
  • A network of agreements to avoid double taxation

Compliance Still Matters

A low tax burden does not mean low administration. Hong Kong companies are required to keep proper accounting records, have their financial statements audited and file profits tax returns. They also need to maintain a registered office in Hong Kong and appoint a company secretary. Ignoring these obligations can lead to penalties and difficulties with banks.

Consider Your Home Country Too

If you are resident in the UK or elsewhere in Europe, the tax position of a Hong Kong company also depends on the rules in your own country, such as tax residence, where the company is managed and controlled, and controlled foreign company rules. It is important to look at the whole structure rather than at Hong Kong in isolation.

If you are considering a company in Hong Kong, contact eTuls. We can help with formation, accounting and ongoing compliance, and work with you to understand how the structure fits your wider situation.