In the morning today, Lam Cheng Yuet-ngor, HK Chief Executive, officially announced that the tax rate of the first 2 million HKD annual profits for an HK company would be reduced from 16.5% to 8.25%! It means, there is a 50% discount of the tax rate!
Tax Calculation
Annual Corporate Profit(HKD) |
Profit Tax Rate(%) |
|---|---|
≤2，000，000 |
8.25(half of the current rate) |
>2，000，000 |
16.5(the same as the current rate) |
As you see in the form above, the tax rate of the first 2 million HKD annual profits will be reduced to 8.25%!
Surprisingly, it is estimated that hundreds of thousand small and medium enterprises will benefit from tax reduction for at least 50% less than before! Hurray!!!
In addition, to encourage more enterprise investments in scientific research projects, there will be 300% of tax reduction for the first 2 million HKD spent in eligible scientific projects, and 200% of tax reduction for the rest expense (after the first 2 million HKD).
Annual Corporate Profit(HKD) |
Tax Deduction(%) |
|---|---|
≤2，000，000 |
300 |
>2，000，000 |
200 |
The policy is expected to be implemented in 2018.
Advantages of HK Company
Besides from lower tax rate, there are also many reasons for establishing HK companies:
❶ HK company is the most popular offshore company.
❷ In foreign trade, only corporate incomes from HK need to pay tax.
❸ Opening HK bank account in the name of HK company makes it more convenient to receive USD.
❹ The company can advertise itself as an HK Corporate, which appears to be more internationally recommended and popular.
❺ A proper taxation plan for HK company helps to avoid unnecessary tax and risk.
Simpliest Tax System
Under CRS, many entrepreneurs in China choose to establish their companies in HK because of lower and simpler taxation, comparing to tax system in Chinese mainland.
Furthermore, only corporate incomes from HK are calculated in the payable tax under HK tax system.
Hongkong, an international finance center, is known as a free trade port. Hongkong remains competitiveness with its low and simple taxation. In this case, entrepreneurs choose to start their business just right here in Hongkong.
So, don’t be hesitated, it’s time to establish your HK company!
Any question about HK bank account or establishing HK company, welcome to contact HACOS!
Are You Qualified For China Z-visa!
This 1 Minute Test Can Tell!
HACOS,Business Services Solutions Master