What are the tax advantages of Hong Kong?
Hong Kong’s tax advantages are among the main reasons entrepreneurs choose to set up a company there.
The key point to understand is the principle of territorial taxation: taxation depends on where the profits are generated.
What do you need to know about taxation in Hong Kong?
Profits made in Hong Kong
Companies that earn profits in Hong Kong are taxed at a rate of up to 16.5%.
Benefits realized outside Hong Kong
Companies that earn their profits outside Hong Kong are simply not taxed on those profits.
Dividends
There is no tax or withholding tax on distributed dividends.
What about customs duties and charges?
Hong Kong is a free port
Hong Kong is a free port, meaning a port area not subject to customs services.
Low employee and employer payroll contributions
Employee and employer payroll contributions are low, which is another advantage highlighted for businesses.
Contribution for an employee in Hong Kong
For an employee who lives and works in Hong Kong, a mandatory contribution to a provident fund amounts to 5% of the monthly salary, with a cap of HKD 1,000.
This charge does not apply to staff hired outside Hong Kong.
These rules involve nuances that must be taken into account depending on the company’s actual business activities. Société HK has been supporting entrepreneurs establishing their companies in Hong Kong for more than 20 years and keeps up with regulatory developments.
Hong Kong also offers banking and legal advantages that should be considered alongside the tax aspects.