Taxes – Hong Kong

Hong Kong uses a territorial tax system, which is particularly attractive for foreign entrepreneurs — especially those setting up an offshore company. Corporate tax is not calculated the same way for every business in Hong Kong: it depends on how the company actually operates day to day.

Offshore Companies

A company incorporated in Hong Kong but with no physical office or staff there, and whose activity is carried out entirely outside Hong Kong, is not taxed on its profits or dividends. Advantages of this model include:

• Favorable tax treatment
• Access to the Asian market
• Support from a strong, growing economy
• Credibility — Hong Kong is well regarded by the OECD and is not considered a tax haven

Note: Hong Kong authorities may require proof that the company does not operate within the territory, which involves providing certain documentation.

Companies Operating Locally

If your business needs a Hong Kong office, local staff, or operates directly within the territory, different tax rules apply: profits are taxed at 16.5%, and personal income tax can reach up to 15%. These rates remain considerably more favorable than in France. Notably, there is no VAT in Hong Kong.

Compliance

Companies in Hong Kong are required to maintain strict accounting records. For offshore companies, if the required documentation proving offshore status cannot be provided, the company becomes liable for corporate tax like any other locally operating business.