Page 10 - The South China Business Journal

D EPTH

Hong Kong tax advantages compared with
major economies
Hong Kong entities are frequently used in
Tax multinational corporate structures because
Category Hong Kong Singapore Dubai
of the jurisdiction¡¯s tax neutrality and
9% (federal strong legal protections.
corporate
Corporate 16.5% 17% tax on
tax business CoMMon MistaKes tHe CHinese
net profits
exceeding Mainland CoMpanies MaKe wHen
AED entering Hong Kong
375,000)
Mistake 1: Underestimating banking
Capital None Generally None compliance requirements
gains tax non-taxable
Hong Kong banks apply strict anti-money
VAT None 9% 5% laundering (AML) and beneficial ownership checks,
which can delay corporate bank account approvals.
Dividend None None None
withholding Mistake 2: Incorrect tax structuring
tax
Some companies assume Hong Kong profits are
Corporate governanCe and automatically tax-exempt.

CoMplianCe requireMents However, Hong Kong applies a territorial tax
system, meaning companies must prove that
Companies incorporated in Hong Kong must income is sourced outside Hong Kong to qualify for
comply with ongoing regulatory obligations. offshore tax treatment.
Key compliance requirements include: Mistake 3: Ignoring the Chinese Mainland
outbound investment rules
? Appointment and maintenance of a company
secretary and registered office in Hong Kong The Chinese Mainland companies establishing
(ongoing requirement) overseas entities may need approvals or filings
? Compliance with economic substance/transfer with Chinese regulators, as mentioned in
pricing documentation, where applicable earlier sections.
? Annual returns filing with the Companies Registry
(Form NAR1) Mistake 4: Weak corporate governance
? Preparation of audited financial statements practices
(unless exempt as a dormant company)
? Profits tax return filing with the IRD Hong Kong companies must maintain transparency
? Maintenance of a Significant Controllers Register requirements such as a Significant Controllers
? Holding of annual general meetings (AGMs) Register, which tracks beneficial ownership.
unless exempted (for example, for single-
member companies)
? Proper maintenance of statutory books and iMMigration and talent Mobility
records (for example, registers of directors,
shareholders, and charges) Executives relocating to Hong Kong must obtain
? Business registration certificate renewal on an appropriate visas.
annual or three-year basis
? Timely notification of changes (for example, The Investment Visa / Entrepreneur Visa
directors, company secretary, registered office) to allows entrepreneurs to establish or join a
the Companies Registry business in Hong Kong.

7 AMCHAM SOUTH CHINA