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This section focuses on the fundamentals of tax law in Kowloon, Hong Kong. Hong Kong taxation is based on a territorial principle, meaning that taxes are only levied on income and profits derived from within Hong Kong. The taxation system is relatively straightforward with three main direct taxes: Salary Tax, Profits Tax, and Property Tax.
Quandaries in tax law can arise due to the complexities and frequent changes in tax rules and regulations. You may need a tax lawyer to provide guidance on tax savings techniques, assist with tax controversy and dispute matters, provide estate planning services, or provide counsel on business structuring and operation implications. Additionally, businesses often require assistance for tax audit and investigation processes.
As previously mentioned, Hong Kong operates on a territorial principle for taxation. Salary Tax is levied on income arising in or derived from Hong Kong from any office, employment, or pension. Profits tax is imposed on businesses for profits arising from trade, profession, or business carried out in Hong Kong. The Property Tax applies to property owners who receive rental income from real estates located in Hong Kong. There is no capital gains, sales, or value-added tax applied in Kowloon, Hong Kong.
For corporations, the tax rate is 16.5% and for unincorporated businesses, it's 15%.
Yes, in Hong Kong, there are allowable deductions such as expenses incurred in the production of chargeable income and approved charitable donations.
If you have overdue taxes, the Inland Revenue Department has a policy for applying for holdover of payment and payment by installments.
No, pensions received for past employment services rendered in Hong Kong aren’t chargeable to Salaries Tax.
No, foreign-sourced income is generally not subject to tax in Hong Kong as it's a territorial-based tax system.
The Inland Revenue Department (IRD) is the governing body for administering and enforcing the tax laws in Hong Kong and is a useful resource. For deeper insights into the tax law, the Business and Professional Law guide as provided by the Hong Kong government may prove practical.
If you need legal assistance, you ought to hire a tax lawyer. Make sure to hire a lawyer that specializes in tax laws in Hong Kong. The initial consultation is typically free of charge, thus, making an appointment to discuss your case with one or more lawyers before deciding who to hire is advisable.
