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Hong Kong Corporate Tax Guide: Improve Your Tax Planning

corporate tax planning

Hong Kong Corporate Tax Guide: Improve Your Tax Planning

Improve Your Tax Planning with our Hong Kong Corporate Tax Guide

Hong Kong is world-renowned for its business-friendly taxation and regulatory environment, with corporate tax rates that are considered some of the lowest in Asia.

However, some companies still pay more tax than they need to. Effective corporate tax planning maximises tax benefits while maintaining compliance. To help your company improve its tax planning, we have created a guide to corporate tax in Hong Kong.

How to pay corporate tax in Hong Kong

Corporate tax is known locally as ‘profits tax’ in Hong Kong. It applies to all profits (excluding capital asset sales) that are:

  • sourced in Hong Kong; and
  • generated by corporations, sole proprietors, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong.

For corporate tax purposes, no distinction is made between resident and non-resident companies. This means no tax is levied on profits arising abroad, even if they are remitted to Hong Kong.

The standard profits tax rate is capped at 16.5% for corporations or 15% for unincorporated businesses. However, a two-tiered profits tax rates regime applies, which lowers the rate on the first HKD 2 million of assessable profits to:

  • 8.25% for corporations; or
  • 7.5% for unincorporated businesses.

Assessable profits above HKD 2 million are subject to the standard profits tax rate.

Typically, the Inland Revenue Department (IRD) issues profits tax returns annually on the first business day of April. After calculating how much tax your company owes, file your profits tax return within one month of the issue date (subject to any extension applications).

When your company receives the IRD’s notice of assessment, you must pay a provisional tax. If your company ends up under- or overpaying your provisional profits tax, you can subtract or add the amount to your payable tax for the following year.

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Why business tax planning is important

Effective corporate tax planning is all about analysing your company’s finances to ensure that you pay the lowest tax possible while staying compliant. Prioritising tax planning is vital to your business success because implementing the right strategies could ultimately save your company thousands of dollars.

How your company could benefit from expert business tax advisory services

Navigating Hong Kong’s complex tax regulations can be challenging. Without expert tax accounting support, it can be easy to miss out on tax breaks and exemptions that your business is entitled to. The best way to maximise your company’s savings and deductions is to work with professional accountants who understand Hong Kong’s regulations.

Our tax experts at BoardRoom are not only well versed in local tax regulations but also have in-depth knowledge of international tax treaties. With their advice, your organisation can avoid any double tax issues. Moreover, our team will help you to apply for any extra tax incentives that could benefit your business.

Additionally, as your company grows, so too does the complexity of your tax reporting obligations. If you fail to meet your tax filing obligations, you may experience costly penalties. Our corporate tax accountants help countless businesses in all industries and sizes across Hong Kong and the APAC region to stay tax compliant each financial year.

Looking for trusted tax advisory services in Hong Kong?

Contact our taxation specialists today to discover how they could help your company stay compliant and maximise tax benefits.
We also offer a range of other corporate services all under one roof, including:

These make it easier for you to get on with business while we take care of the time-consuming, operational tasks.

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