TAX SYSTEM IN HONG KONG: (http://www.kpcoffices.com/
In Hong Kong there is
No capital gains tax
No dividend tax
No sales tax
No withholding tax and
No 1estate tax
This simple taxation makes the city very competitive. Corporation pays the profits tax before distributing dividends to shareholders. No extra tax is imposed on the dividends. The city enforced three direct taxes such as
· 16.5% Profit tax, which is applicable to business profits
· 15% Salaries tax, which is applicable to individual’s employment income
· Property tax, the rental income from real estate.
HIDDEN TAX AND DEDUCTIONS:
The high property rates and rents paid by people acts as indirect tax. There are few hidden taxes in Hong Kong such as hotel accommodation tax, betting duty, entertainment tax etc., Stamp duty is levied on stocks, shares and real estate transfers. Estate duty is paid when passing property on death of a person. Tax is charged for non- residents directly or indirectly in respect to the profits raised in Hong Kong from any kind of business or trade.
Tax is not liable when income is derived from outside the Hong Kong. Deductions are provided for the profits incurred on the interest of funds borrowed and building rents. It also includes bad debts, repairs of machineries used for producing profits, Research and Development, employer’s contribution to retirement scheme or insurance, donations and other mandatory contributions.
HONG KONG A FREE PORT:
There is no tax on exports from Hong Kong. After eliminating tariffs on wine in 2008, Hong Kong became first free wine port. This wine trading and distribution center has now overtaken New York and London to turn into world’s largest wine auction market. However imported wines to Mainland China from overseas has tariff up to 20%. Government has introduced Special Stamp Duty in Nov, 2010 and Buyer’s Stamp duty in Oct, 2012 and there was increase in ad valorem stamp duty in Feb 2013 in order to prevent property prices from exceeding the economic fundamentals and to maintain the financial stability.
COLLECTION OF TAXES:
The taxpayer should settle the amount payable on time
1. Payment via electronic means by phone, ATM or via Internet
2. Payment via post is only bycheque, and no cash
3. Payment via person at post offices, convenience stores etc.
Penalties are imposed on employees who failed to pay tax, without reasonable excuse on the requirements of Inland Revenue Ordinance. In case of financial difficulties you can apply for installment payment tax before the due date.