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Tax Preparation

Tax Preparation

Hong Kong Taxes

Hong Kong taxation is a complex issue for many people. The tax system in Hong Kong respects the freedom of economic activity enjoyed by the residents of Hong Kong. The Basic Law of Hong Kong clearly states that the provision of services and taxation in the territory must be maintained in accordance with the decisions of the government of Hong Kong. Therefore, hong kong taxation is not identical to taxation in mainland China or any other country. Hong Kong taxes are subject to the following constraints:

There are three main authorities responsible for the collection of taxes in Hong Kong. These are the Customs and Excise Department; the Hong Kong Revenue Department; and the Hong Kong Public Office. In addition, there are numerous agencies and officers appointed by the government to deal with specific administrative works relating to the administration of Hong Kong taxation. These are the Hong Kong Police Force, the Hong Kong Fire and Rescue Service, the Hong Kong Health and Food Inspection Service, and the Hong Kong Central Business Improvement Program (CHIP). Click here to understand more about Hong Kong taxation services.

The central government grants the authority to set the rate of income tax and its modes of taxation. In addition, the government controls the amount of grants granted to corporations in Hong Kong. Many people mistakenly believe that their income is exempt from taxes in Hong Kong due to the presence of a double taxation agreement between the government and some major corporations in China. This is not the case; no agreement exists to grant any corporation special tax benefits.

The Hong Kong stamp duty system is administered by the customs. The Hong Kong stamp duty system collects the custom fees, which include the value of the foreign currency imported or exported and the rate of stamp duty paid on personal properties such as houses, buildings, etc. Some sectors of the industry also pay special taxes on their goods and services. These are the steel and electronic gadgets market, chemical processing industry, cosmetic manufacturing industry, and the petroleum products market. These companies do not pay Hong Kong stamp duty directly; they register their goods and services with the customs and then pay the corresponding Hong Kong tax on their behalf.

Profits and losses incurred by businesses in Hong Kong are taxed separately. The profits of a company are taxable under the Income-based Tax system and the profits of individuals are subject to the Capital Gains Tax system. The profits of corporations are generally exempt from both income and capital gains tax. Businessmen have to pay income tax on the income from the sale of shares of stock and also pay a portion of corporate interest earned through dividends. However, small scale businesses are not liable to pay income tax on the salaries of employees.

Hong Kong provides an opportunity for businessmen to save tax rates. The Hong Kong tax system has simplified the collection of tax payments and has increased the reliability of the tax system. In addition, it also encourages people to start their own small businesses since they are exempt from the higher corporate tax rates and have more say in the management and operation of their own firm. For better understanding of this topic, please click here: https://simple.wikipedia.org/wiki/Tax.

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