1. A Guide to Corporate Tax (Profit Tax) in Hong Kong ... In other words, Hong Kong withholding tax is the portion of the payments withheld from the fees paid to a non-resident. Historical Data (%) by years Data Period Date Historical Chart by chief executives (%) Carrie Lam Corporate Tax Rate in Hong Kong by chief executives Other taxes in Hong Kong Because Hong Kong is a special administrative region of the People's Republic of China, this corporate tax applies to profits produced by Hong Kong companies only in Hong Kong. As a general rule, Hong Kong profits tax is levied on any persons who carries on a trade, profession or business in Hong Kong and assessable profits arising in or derived from Hong Kong for a year of assessment. The content is current on 1 January 2021 . New offerings this year . Current Corporate Tax Policies in Hong Kong Hong Kong is lauded for its limited taxations and fair policies for foreign residents and corporations. 11% of gross amount payable. Corporate Tax in Hong Kong | Hong Kong SAR Corporate Tax Rate Both territories have a low corporate tax rate: Hong Kong's 16.5% and Singapore's 17%; Hong Kong does not tax dividends or interest income (potentially). Hong Kong Corporate Tax Rates | Business Guide There are no capitals gains tax, no VAT/GST, no estate duty, and no withholding tax on dividends or interest. Hong Kong charges the corporate tax rate of 8.25% on the assessable profits earned, increasing to 16.5% for profits over HKD 2 million. However, there are various tax incentives for special business operations, such as tax exemption for profits derived by offshore funds (offshore tax exemption Hong Kong) and profits derived from operating ships in Hong Kong. Corporate Tax Rate in Hong Kong remained unchanged at 16.5 % in 2021. Expenses incurred in the production of profits that are chargeable to tax are generally deductible. Tax Rates. The HKG allows a deduction on interest paid to overseas-associated corporations and provides an 8.25 percent concessionary tax rate derived by a qualifying corporate treasury center. A further 50% exemption on the next $290,000 of normal chargeable income*. Hong Kong also signs tax agreements with different countries around the world to enhance the competitiveness of the global market from time to time. Trading profits and any interest income from qualifying debt instruments in Hong Kong will be a concessionary rate of 50% of the normal profits tax rate. However, for business carried out in Hong Kong, corporate tax is at the rate of 8.25% for profits up to HK$ 2 million (c. US$ 250K), rising to a maximum tax rate of 16.5 % tax rate. report examines the corporate tax havens that are undermining the whole system of effective corporate tax, naming the worst 15 in the world. 50% of the regular profits tax rate) under specified conditions. A company's profits tax in Hong Kong has an assessable rate of 16.5%. Current Tax Rates. But some of the tax perks Hong Kong uses to attract foreign investment are likely to be eroded, because specific concessions and exclusions allow some companies to lower their effective tax rate to. a lower rate is specified in the relevant treaty. The tables below summarise the amount of tax exemption. Withholding rate / amount. unless no person carrying on a business in Hong Kong SAR has at any time . Please use this chart with the tax incentive information as many countries like Thailand and Vietnam give very generous tax incentives for target companies that can make your effective . Contents Income tax 1-2 Salaries tax 3-8 Profits tax 9-18 . The IRAS will also regard the subject to tax condition satisfied if the income is exempted from tax in the foreign jurisdiction due to tax incentive(s) granted for substantive business activities . Trading profits and any interest income from qualifying debt instruments in Hong Kong will be a concessionary rate of 50% of the normal profits tax rate. The source of profits is one of the most controversial topics in the context of Hong Kong taxation. Data published Yearly by Inland Revenue Department. form of lower effective tax rate capped at 75% exemption on first SGD 10,000 and 50% exemption on next SGD 290,000. [Effective Tax Rate Hong Kong] - 9 images - romania vat split payment mechanism to become optional bdo, helping the rich get richer industry 2012 09 20, Chapter by chapter, from Albania to Zimbabwe, we summarize corporate tax systems in more than 160 jurisdictions. Tax Rates. Royalties: 2.475% for the first HKD 6.67 million of gross royalty income and 4.95% for the remaining amount if the two-tier tax rates apply/4.95% if the two-tier tax rates do not apply/16.5% if paid to an affiliated non-resident and the IP was previously owned by a person carrying on business in Hong Kong Faced with a tax rate as high as 45% -- up from about 15% previously -- Chinese professionals across Hong Kong are considering moving back home to avoid getting squeezed by both the new levy and . The Business Registration Ordinance requires every person who carries on a business in Hong Kong to apply for business registration within 1 . 15% applicable for profits realized as from January 1st, 2021 (The rate of 25% applicable up to 2020 was decreased to 15% by the finance law 2021. The profits tax rate applied is 15% for individuals and 16.5% for corporations (a.k.a. Corporate Tax Rate in Taiwan averaged 21.35 percent from 1999 until 2021, reaching an all time high of 25 percent in 2000 and a record low of 17 percent in 2010. As Hong Kong SAR's tax system is territorially based, tax is not levied on the basis of a company's residence and therefore, . With effect from 1 April 2018, a two-tiered profits tax rates regime applies. Foreign-sourced dividend may be paid by a company listed on the stock exchange in 1 jurisdiction (e.g. However, if the income has been subject to tax in Hong Kong (which has a headline rate of 16.5%), then the subject to tax test would be satisfied. The corporate tax rates apply on the company's overall profits during the tax year, with the first HKD 2 million being at 8.25% and 7.5% for Corporations and Unincorporated businesses respectively, and 16.% and 15% for profits thereafter.Thus for example if a corporation makes HKD 10 million dollars during the year, the first HKD 2 million would be taxed at 8.25% (HKD 165,000 tax payable . Personal allowances. On Wednesday, 24 February 2021, Financial Secretary Paul Chan Mo-po released the Hong Kong budget initiatives for the fiscal year 2021/22. The tax rates varies depending on factors such as the general form through which the business is being conducted, such as by means of a sole proprietorship or a . What is the corporate tax rate in Hong Kong? Stamp duty applies to the transfer of Hong Kong SAR stock at a rate of 0.2 percent on the higher of the consideration paid or This is below the worldwide average which, measured across 177 jurisdictions, was 23.9 percent in 2020. Secondly, the report analyses the way the rest of the world is engaging in a dangerous and ultimately self-defeating competition on corporate tax rates and tax exemptions. Amount to be Retained. Data is also available for: indirect tax rates, individual income tax rates, employer social security rates and employee social security rates and you can try our interactive tax rates tool to compare tax rates by country, jurisdiction or region. The withholding rate is: 10% for interest payments. "The losers are tax havens like Hong Kong," she said, noting that for businesses incorporated in Hong Kong, the first HK$2 million (US$257,000) worth of profits are taxed at half the standard tax rate, while the remaining profits are taxed at the existing 16.5 per cent tax rate - both below the minimum 21 per cent rate proposed by the US. In Hong Kong the de facto tax rate is often lower than the statutory 16.5 . the standard rate) on their net assessable profits for the year of assessment . Hong Kong's corporate income tax rate is only 16.5%. For example, Hong Kong's double tax agreement with China reduces the withholding tax rate on dividends from 10 percent to five percent where the beneficial owner directly owns more than 25 percent equity of the company that pays the dividends, unless the dividends should be regarded as business profits. Hong Kong. Tax Exemptions in respect of Relief Measures under the Anti-epidemic Fund Relief Measure: Conditional waiver of surcharges for instalment settlement of demand notes for the Year of Assessment 2018/19 Individuals These rates apply to all payees unless: the payment is made to a resident of a country which has a tax treaty with Australia. In April, US Treasury Secretary Janet Yellen proposed a global corporate tax rate of at least 21 percent to deter multinational corporations (MNCs) from . Hong Kong has a territorial taxation system, which means that only the income . Hong Kong tax rates and allowances: The tax charge is the lower of: a) the standard rate of 15% applying to net chargeable income before personal allowances; b) the progressive rates applying to net chargeable income. Note. Royalty / licence fee. In fact, a global minimum rate of 21 per cent proposed by the US will be disastrous for Singapore given its current corporate tax rate of 17 per cent. The maximum rate was 17.5 % and minimum was 16 %. Although the headline corporate tax rate in Hong Kong SAR is 16.5%, Hong Kong SAR offers a wide range of income exclusions/exemptions, tax incentives and enhanced deductions which could reduce a group's overall effective tax rate in Hong Kong SAR below the agreed 15% global minimum tax rate under pillar two. SINGAPORE - A minimum corporate tax rate for all companies across the world being advocated by the US Government could affect the financials hubs of Singapore and Hong Kong, reported The Business Times on Monday morning (10 May, SGT).. Hong Kong's Inland Revenue Department is the one to receive that amount. For businesses all over the world, this tax rate is among the lowest, and is a major reason for Hong Kong being an attractive jurisdiction for incorporating a business. The Corporate Tax Rate in Hong Kong stands at 16.50 percent. As recently as March, Hong Kong's Chief Secretary for Administration told foreign investors that " very low tax in Hong Kong is assured " into the future. Hong Kong Budget 2021/22: Review of Proposed Tax Measures. Amount to be Retained. The HKG offers an effective tax rate of around three to four percent to attract aircraft leasing companies to develop business in Hong Kong. Rates of tax 4 Personal allowances 4 Deductions 5 Tax . Chinese firms largely fueled a record $52 billion haul for companies that sold new shares on the Hong Kong Stock Exchange last year, according to Dealogic, a data provider. 2018/19 onwards. When a royalty payment is made to a non-resident associated person and the underlying intellectual property was once owned by any Hong Kong taxpayer, the assessable profits of the non-resident associated person are deemed to be 100% of the payment (i.e., the effective tax rate is 16.5%). Conclusion Hong Kong's low tax rate and special tax regimes for small companies and startups has enticed many foreigners around the world to invest in Hong Kong. Any income that is not within any one of . Read on to find out more. 4.95% (corporation) / 4.5% (unincorporated business) Note. The corporate tax rate in Hong Kong is capped at 16.5%, while income tax is charged progressively at a rate of 2%-17% and there is no tax on capital gains. This goes to show that Singapore keeps lowering its tax rates constantly in order to help maintain its competitiveness. Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. Turkey (Last reviewed 30 September 2021) The headline corporate income tax rate for 2021 is 25%. Branches are taxed in the same way as corporations. In Hong Kong, corporations have two options for Profit Tax Rates: Single-Tier Corporate Tax System The Single-Tier Corporate Tax System-corporations are taxed at 16.5% on assessable profits and unincorporated businesses are taxed at 15%. Corporate Tax Rate in Taiwan remained unchanged at 20 percent in 2021 from 20 percent in 2020. Hong Kong has an attractive corporate tax regime highlighted by low Hong Kong tax rates. Two-Tier Profits Tax Regime Source of Income Tax Rate *Hong Kong - sourced income (net) 8.25% on assessable profit up to HK$2M; and 16.5% on any part over HK$2M . Hong Kong adopts the territorial source tax system, whereby only income arising in or derived from a trade, profession or business carried on in Hong Kong is subject to profits tax. However, there are different tiers and classifications of tax rates that businesses owners should be aware of! *Normal chargeable income refers to income to be taxed at the prevailing Corporate Income Tax rate of 17%. Inland Revenue Ordinance 2018 enacted on 29 March 2018 introduced the two-tier tax system. Rate- The statutory tax rate is 16.5% for corporations and 15% for unincorporated businesses. China has a nominal corporate tax rate of 25 per cent and grants a 15 per cent rate for qualified hi-tech companies. 30% for unfranked dividend and royalty payments. Assessable profits of corporations are taxed at the corporate tax rate of 16.5%. foreign headline tax rate condition) . The maximum exemption for each YA is $102,500 ($7,500 + $95,000). The content is straightforward. For businesses all over the world, this tax rate is among the lowest, and is a major reason for Hong Kong being an attractive jurisdiction for incorporating a business. The tax rate for corporations is 16.5% while the tax rate for unincorporated business is 15%. Hong Kong has been witnessing a challenging year of 2020 due to the widespread COVID-19 pandemic. (1) 100% of the 2020/21 profits tax is waived subject to a ceiling of $10,000 per case. Withholding rate. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5 percent and 15 percent. A company's profits tax in Hong Kong has an assessable rate of 16.5%. When it comes to corporate taxation Singapore Vs Hong Kong the corporate tax rate in Singapore is 17% while the corporate profits in Hong Kong is 16.5 for corporations profits and for the unincorporated companies it stands at 15%. (2) 100% of the 2019/20 profits tax is waived subject to a . Hong Kong does not impose withholding tax on dividends and interest. The jurisdiction of Hong Kong has a simple tax structure and favors company setup. In Hong Kong, corporate tax, (or profits tax as it is known), is set at 16.5% of assessable profits for corporations and 15% for unincorporated businesses. KPMG's corporate tax rates table provides a view of corporate tax rates around the world. However, Hong Kong does have some significant advantages over Singapore when considering a holding company location. Hong Kong Profits Tax is a tax levied on the net profits on business. As a matter of fact, Hong Kong taxes are among the lowest in the world. Types of Taxes in Hong Kong Hong Kong Government imposes only three direct taxes on individuals and companies, which itself are imposed at very low rates and comes out to be even lower with generous allowances and deductions. In order to make Singapore an attractive investment destination, corporate tax rates in Singapore have been going down consistently. Companies and individuals ( sole proprietors) carrying out business in Hong Kong will be liable to Profits Tax provided that the profits are sourced in Hong Kong. 2019-20 HK$. This page provides - Taiwan Corporate Tax Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. The Hong Kong Government recently gazetted a Bill which introduces a concessionary profits tax rate for qualifying corporate treasury centres (qualifying CTCs), new rules to deem certain interest income and other gains as Hong Kong-sourced and amendments to the existing interest deduction provisions to enable a deduction for interest on certain intra-group lending transactions. The rate will fall to 23% for 2022. Bermuda). Unincorporated business: for the first HKD 2 million assessable profits, the tax rate is 7.5%; the remainder of assessable profits are subject to a 15% tax rate. Other profits are exempt from tax in most cases and profits derived from certain securities or types of business . In fact, the World Bank's Doing Business 2019 Report ranks Hong Kong as the world's lowest tax region. For unincorporated business (i.e. If this is the case, the lower treaty rate will apply. The conventional corporate income tax rate in Hong Kong is 16.5%, and a lower rate of 15% applies to unincorporated businesses. Tax Perspective - Hong Kong vs Singapore Hong Kong Company Singapore Company Tax jurisdiction . 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000. Since 2005, incorporated companies enjoy . (1) 100% of the 2020/21 profits tax is waived subject to a ceiling of $10,000 per case. Sums for assignment of performer's right. source: Inland Revenue Department, Hong Kong 10Y 25Y 50Y MAX Chart Compare Export API Embed Hong Kong Corporate Tax Rate In Hong Kong, the Corporate Income tax rate is a tax collected from companies. 2018/19 onwards. Boasting a corporate tax rate of 16.5%, Hong Kong is a global commerce hub with business-friendly taxation and economic policies. The straightforward answer to this is 16.5% on all assessable profits made by a company annually. 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