Offices Location & Phone No.
Hongkong, China Office : (852) 2868 9205
Guangzhou, China Office : (8620) 3880 0116
Shanghai, China Office : (8621) 6331 1978
Hong Kong companies may generate other types of business profits apart from those previously mentioned, and these profits are also subject to Hong Kong profits tax. The determination of the source of these profits can be complex, and specific tests are used to assess their origin.
Interest income
Interest income is sourced according to the place of where the debt-creating cause is. If the debt-creating cause is located in Hong Kong, the interest income is taxable here. However, if the debt-creating cause is located outside Hong Kong, the interest income is not taxable here.
Dividend income
The source of dividend income is dependent on the location of the company that declares the dividends. If the company that declares the dividends is located in Hong Kong, the dividend income is taxable here. However, if the company that declares the dividends is located outside Hong Kong, the dividend income is not taxable here.
Rental income
The source of rental income is dependent on the location of the property. If the property generating the rental income is located in Hong Kong, the rental income is taxable here. However, if the property generating the rental income is located outside Hong Kong, the rental income is not taxable here.
Royalty income
Royalty income is sourced according to the place of use of the rights that generate the royalties. If the rights are used in Hong Kong, the royalty income is taxable here. However, if the rights are used outside Hong Kong, the royalty income is not taxable here.
Other income
Other income includes income not covered by the previous categories, such as gains on the sale of fixed assets, insurance compensation, and income from foreign exchange dealings. The source of other income is dependent on the nature of the income, and it is assessed on a case-by-case basis.
In summary, determining the source of profits generated by Hong Kong companies can be a complex process that involves various tests and considerations. It is crucial for companies to have a deep understanding of the Hong Kong tax system and its regulations to ensure compliance and minimize tax liabilities. Seeking the advice of tax professionals can help companies navigate the complexities of the tax system and optimize their tax positions.
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Profits under the Hong Kong Company
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Tax liability in Hong Kong
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Rental income from real property
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Taxable if the property is located in Hong Kong
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Profits derived by an owner from the sale of real property
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Taxable if the property is located in Hong Kong
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Profits from the purchase and sale of listed shares and other listed securities
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Taxable if the stock exchange where the shares or securities in question are traded is located in Hong Kong
Where the purchase and sale took place over-the-counter, taxable where the contracts of purchase and sale are effected in Hong Kong |
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Profits accruing to a business (other than a financial institution) from the purchase and sale of unlisted shares and other unlisted securities
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Taxable where the contracts of purchase and sale are effected in Hong Kong
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Service fee income
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Taxable if the services which give rise to the payment of the fees are performed in Hong Kong
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Royalties received by a business
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Taxable if the licence or right of use is acquired and granted in Hong Kong
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Royalties on intellectual property received from Hong Kong by a non-resident
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Taxable if the intellectual property is used in Hong Kong For royalties received or accrued on or after 25 June 2004, if the intellectual property is used outside Hong Kong, taxable if the royalty payment is deductible in ascertaining the assessable profits of the payer under profits tax
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Interest accruing to a business (other than a financial institution)
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Taxable if the lender provides the funds in Hong Kong to the borrower
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