28 October, 2011

Thinking About Doing Business in Hong Kong?

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By: Lawrence Cheung– NIS Global Hong Kong

A quick guide of doing business through a Hong Kong limited company


1.     Tax savings – company


  • ?   Territory concept – only pays tax on profits earned from business activities in HK
  • ?   Service income such as commission, consulting fee will be tax free if services are provided outside HK e.g. Sourcing company assisting clients to buy from or sell to China
  • ?   Trading profit will be tax free if significant business activities are done outside HK with no HK employees, no HK customers and suppliers e.g. Trading company trading between China and any countries other HK
  • ?   Capital gain on investment in properties, securities is tax free
  • ?   Dividend income is tax free
  • ?   Interest income from bank deposit is tax free
  • ?   No VAT
  • ?   Profits tax at 16.5% is the only tax an incorporation needs to pay
  • ?   100% tax allowance for computer hardware and software, certain qualified machineries, patents and know-how purchase costs, registration costs of trademark, designs and patents
  • ?   Initial allowance or/and annual allowance for qualified costs of building, renovation, machineries, equipment, cars etc.

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