Hong Kong Tax Rules
   
Hong Kong Taxation:
1.
3 Major taxes in Hong Kong:Profits TaxSalaries Tax and Property tax.
In some circumstances, tax payer may select Personal Assessment,to add up all income (salary + profits + property income of himself and his wife) for tax minimization purpose.
2.

Tax deadline: Sole proprietorship: 3 months; partnership and corporations: 1 month with extension allowed.

Date of issuing tax return: First return: 18 months after company formation, recurrent return: 2 May (sole proprietorship), 1 April (Partnership / Corporation)

3. Estimated assessment maybe imposed in the following case:
  (a) Not filing return in a specific time,
  (b) Filed return not accepted by IRD,
  (c) Incomplete business records .
Objection on notice of assessment must be lodged within 30 days after issuing date.

   
Profits Tax:
 
  1. Tax is based on net assessable profit, no sales / service tax.
  2. Offshore profits are exempted from tax。
  3. Profits Tax (2010/11):- Corporations:16.5%Unincorporated business : 15%
  4. Assessable profit = Net profits + undeductible expenses - depreciation allowance

* Undeductible expense: Private expense, proprietor / partner (and spouse) salaries;


   
Salaries Tax:
 
1.
Income from Hong Kong employments are subject to salaries tax.
2.
Anyone visiting Hong Kong for less than 60 days are exempted from salaries tax
4. Chargeable income = Total income - deductions - Personal allowance
  (a) Lower of tax amount computed from progressive rates and standard rate.
  (b) Deductions includes:
   

Charitable donations, MPF / provident fund contributions, self-education expense, Home loan interest, those expense wholly, necessarily and exclusively to incurred for generating the chargeable income. Private and capital expenses are not deductible.

5. Allowance for Year 2012/13
 
  • Basic allowance:HK$120,000
  • Married person allowance:HK$240,000
  • Child allowance:First to Ninth (Each one):HK$63,000
  • Dependent parents / grandparents:HK$38,000 (HK resident and at least 60 year-old)
  • Dependent parents / grandparents:HK$19,000 (HK resident and at least 55 year-old)
  • Additional allowance for dependent: HK$38,000 (at least 60 year-old)
  • Additional allowance for dependent: HK$19,000 (at least 55 year-old)
  • Single parent allowance: HK$120,000
  • Disabled dependent allowance:HK$66,000
6. Salaries tax rate
 

(a)

Progressive rate (2012/13) :
First HK$40,000: 2%
Next HK$40,000: 7%
Next HK$40,000: 12%
Residue: 17%
 

Or (b)

Standard rate :Assessable profits X 15%
*Lower of (a) and (b) *


   
Profits Tax:
  1. Rental income from properties situated in Hong Kong
  2. Tax rate 15% (2012/13)
  3. Assessable value: 80% of total rental income (20% regarded as decorations and improvements)
  4. 20% deductions is a clear cut rate.

Corporation that holding property for rental income may select profits tax rather than property tax to avoid double taxation.



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