Hong Kong

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

Profits tax shall be charged on every person (corporations, partnerships and individuals) carrying on a trade, business or profession in Hong Kong. No distinction is made between residents and non-residents. The rate of profits tax is 17.5% for corporations and 16% for persons other than corporations.

   
Tax rate on long-term capital gains Capital gains is not taxed in Hong-Kong.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies The dividends paid are not taxable.
   
Tax rate on branches Branches are taxed in the same way as the other companies in Hong-Kong.




Income tax

Fiscal year The fiscal year begins on April 1-st and finishes on March 31.
   
Income tax rate There is no income tax but a salaries tax
Tax rate schedule 2004-2005: rate is either progressive from 2% to 20% divided in 4 brackets, or marginal with a flat rate of 16% without any deduction. The final mode of calculation will be the one that favours the most the employee.

0-30,000 HK$ 2%
30,001-60,000 HK$ 8%
60,001-90,000 HK$ 14%
Beyond 90,000 HK$ 20%
   
Tax deductions or other allowances Deductions only concern people who have chosen the progressive mode of levy. The main deductions are:
A basic deduction of 108,000 HK$ for single people; 216,000 HK$ for married couples; 30,000 HL$ for the first two dependent children (sliding scale amount for every supplementary child). The other deductions concern properties and land immobilizations.



VAT rates

Standard rates Government considering introduction of GST in 2009.
   
Reduced rates No VAT rate in Hong-Kong.



Other important taxes


Name of tax
Rate
Successions  
18%  
Property tax  
Progressive rate as regards to the good value:
7,500,000 HK$ - 9,000,000 HK$: 5%
9,000,001 HK$ -10,500,000 HK$: 10%
Beyond 10,500,000 HK$: 15%.  
Stamp duties  
0.75% to 3.75%  


 

Accounting

Introduction
Accounting in Hong-Kong aims at giving a "transparent" overview of the situation of the companies.


General accounting principles
BALANCE SHEET : on December 31 n, to be compared December 31 n-1
FIXED ASSETS
CURRENT ASSETS
Stocks
Marketable securities
Debtors
Cash
CURRENT LIABILITIES
Obligations under finance leases
Proposed dividends
Taxation
Creditors
Loans and bank overdrafts
NET CURRENT ASSETS
LONG TERM LIABILITIES
Deferred taxation
Obligations under finance leases
Bank loans
SHAREHOLDERS EQUITY
Share capital
Reserves
Retained profits

PROFIT AND LOSS ACCOUNT :
1) Turnover
2) Profit before tax
3) Tax
4) Retained profits at the beginning of the fiscal year
5) Dividends
6) Retained profits at the end of the fiscal year.

Obligations and publications
Companies have to produce each year a balance sheet and a profit and loss account.
Moreover, the Ministry of Finance publishes important guidelines in the "Accounting Standards for business Enterprises".

Certification and auditing
The Hong Kong Society of Accountants is the representative authority for accounting.

Professionals and representative organizations
- The Ministry of Finance.



Useful links
For further information, please contact the Invest HK agency.

Last modified in 2006 - ongoing update
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