The Hong Kong corporate tax rate 2022 is an income tax that is levied against businesses in Hong Kong. Its amount is determined by the net profits businesses make from operating their businesses, often over one fiscal year. The corporate tax rate is a major stream of revenue for the Hong Kong government.
Corporate Tax Rate in Hong Kong: Regional Taxation System
Hong Kong uses a territorial tax structure. In simple words, the tax will be collected from those who make money from operating industries, trade professions, or businesses in Hong Kong.
Under the regional rule, citizens and non-citizens are treated equally. A non-citizen who receives income from Hong Kong will be obligated to pay tax from profit arising in Hong Kong.
The Year Of Assessments And Corporate Income Tax Return
A tax year, often known as an assessment year, runs from 1 April to 31 March of one year. The basis period, which is often the fiscal year that ends in the year of analysis, is the time frame used to calculate the taxable profits for a year of assessment.
Every year, on the very first official day of April, tax records are filed. Flat Corporate Tax Rate: The Two-Tier Profit Tax Rates System Commencing Through the 2018–19 Assessment Year
Companies in Hong Kong can choose between two profit tax rates:
1. A Single-Tier Corporate Taxation System
According to the single-tier corporate taxation system, incorporated enterprises pay a concessionary tax rate of 16.5% while unincorporated businesses pay 15% on measurable earnings.
2. A Two-tiered Profits Tax System
A Two-tiered Profits Taxation System lowers the rate of tax for the first $2 million of easily accessible earnings for both corporate entities and unincorporated businesses. A taxpayer's fiscal year must be issued before 1 April 2018 and 31 March 2019 for the two-tier profits tax rates to take effect in qualifying corporate treasury center
Income Taxation and Tax Structure
In Hong Kong, the Income tax is effective from the assessable profits for each year of assessment.
Residents pay income taxes at the following structures:
| Tax Levy | |
Estimated profits | Enterprises | Unincorporated businesses |
First HK$2 million | 8.25% | 7.5% |
Over HK$2 million | 16.5% | 15% |
Which Tax Incentive Programs are Offered in Hong Kong?
The following tax programs are offered in Hong Kong :
A complete write-off of deductible expenses for qualifying debt instruments and machinery.
100% tax write-offs for new purchases of end-user-owned computer hardware and software.
A five-year window during which capital expenses for commercial space remodeling can be written off.
Tax breaks for trusts and mutual funds.
Tax Exempt Rules for Income Tax Audits
The following are exemption rules for income tax audits:
Companies registered in a country where the rules do not demand that the accounts be audited
Companies that have gone dormant officially by submitting a special resolution to the Company Registry are the only ones free from having an audit prepared.
The audits are still necessary for small corporate taxes, which are classified as those whose total gross income for the base amount is less than HKD 2,000,000.
Do you require guidance or assistance with Hong Kong taxes?
Speak with a Hong Kong tax expert by connecting you with one of our dependable Hong Kong tax partners, we can be of assistance.
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