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Taxes & Offshore Income

With all the benefits of starting a business in Hong Kong, the city’s simple and business-friendly low tax system attracts overseas business owners the most.

Businesses are subject to 16.5% profit tax while individuals are subject to maximum 15% income tax. At the same time, offshore income (sourced overseas), can be exempted from tax deductions.

What types of income are taxed in Hong Kong?

1. Profits

Local businesses that conduct business in the territory is taxed at a rate of 16.5% on all profits earned within the city, regardless if the company is resident or not.

Hong Kong companies doing business overseas can make an offshore claim to avoid paying tax on profits derived offshore. However please note that a number of factors are taken into account. Whether the company has any clients in Hong Kong, office in Hong Kong or employees in Hong Kong are just some of the factors considered.

2. Salaries Tax

Employees under contract with a Hong Kong company are taxed in Hong Kong. Salary tax is capped at 15%.

A local resident, who generates profit/income overseas, is not subject to tax in Hong Kong. However a non-resident working for a Hong Kong company may be subject to income tax in the city.

Despite levying the above taxes, Hong Kong is generous and frees its people from capital gains tax, dividends tax, sales tax, and services tax.