Recently, many Hong Kong citizens have received "green bombs", that is, tax bills issued by the Hong Kong government, urging citizens to pay taxes!
Unlike the tax paid once a month in the Mainland, Hong Kong pays it once a year. Although it is paid once a year, the tax rate in Hong Kong is very low and very friendly!
Hong Kong's low tax rate and simple tax system are widely favored by mainland investors!
So, what taxes do you need to pay in Hong Kong, and how low are these taxes?
Introduction to Hong Kong Tax System
Hong Kong levies taxes on a territorial basis and only taxes profits and income derived from Hong Kong.
There are three main direct taxes in Hong Kong: profits tax (corporate income tax), salaries tax (personal income tax) and property tax. Value-added tax and business tax are not set.
These three taxes only need to be filed once a year.
Profits tax
Hong Kong's corporate income tax, also known as "profit tax".
The tax rate for the first 2 million Hong Kong dollars of corporate income is 8.25%, and the excess is 16.5%, while the corporate income tax rate in the Mainland is 25%. There is a large gap between the amount of tax that enterprises need to pay in Hong Kong and the mainland.
In addition, dividends paid by Hong Kong companies are not subject to withholding tax, dividends received are also exempt from profits tax, and no capital gains tax is levied.
Individuals (except financial institutions) and corporations are exempted from income tax on deposit interest income deposited with recognized banks.
Losses can be carried forward indefinitely as a tax deduction.
Other advantages:
01
Loose allowance system
For capital expenditure incurred in the construction of industrial buildings and buildings, 20% of the expenditure is exempted in the year of expenditure and 4% in each subsequent year; commercial buildings are also entitled to a depreciation allowance of 4% in each year.
Capital expenditures incurred for the renovation of commercial buildings are deductible in equal installments over 5 years. Expenditures on industrial plant and machinery, computer hardware, software and development costs related to manufacturing are immediately 100% deductible if held by the end user.
02
Other deductible items
interest on borrowed funds
Rent of buildings and occupied land
employee salary
Bad debts, trademark and patent registration fees
scientific research expenditure
Employee retirement plan contributions, etc.
salaries tax
What we often call "personal income tax" is also called "salary tax" in Hong Kong.
The highest personal salary tax rate in Hong Kong is 15%, while the personal income tax rate in the Mainland can reach up to 45%!
Other advantages:
01
Large amount of deduction
In the "Budget" released by the Hong Kong government every year, the item "tax reduction" will be mentioned.
Basically, 100% of the annual salary tax is reduced or exempted every year, but there is still an upper limit for the amount of reduction and exemption, which is 6,000 Hong Kong dollars this year.
That is to say, if the tax you have to pay a year is within 6,000 Hong Kong dollars, you don’t have to pay it directly, and the corresponding annual salary is about 250,000 Hong Kong dollars or less.
02
Wide variety of duty-free
There are many types of tax exemptions in Hong Kong, many of which enjoy relatively large tax exemptions, such as: tax reduction for married people, tax reduction for children, tax reduction for supporting parents, tax reduction for single-parent families, tax reduction for disabled dependents, etc... ...
property tax
The property tax rate is unified at 15% of the receivable rent (except rates) minus 20% of the repair and maintenance allowance. If the company has paid income tax on rental income, it does not need to pay property tax.
Hong Kong's low tax rate and simple tax system are really attractive!
The strong advantages of its tax system, supplemented by developed infrastructure and convenient channels connecting Asia and the world, have undoubtedly become an ideal destination for companies and individuals to develop their business and reduce their tax burden.
If you are also interested in planning a Hong Kong identity, please contact Xingyunhai International!
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