“Simple tax system, low tax rate and few types of taxes” is the policy that the Hong Kong Government has always pursued. Hong Kong taxation adopts the “territorial Source Principle” rather than “world wide tax” to levy taxes. For example, even if a company is established in Hong Kong, if the profits are not sourced from Hong Kong, it will not be subject to Hong Kong’s profits tax.

The main taxes in Hong Kong are:

• Profits Tax (assessable profit for the first HKD 2 million at only 8.25% tax rate and above the amount at 16.5% tax rate; for some years, 75% of profits tax is waived subject to a ceiling per case)
• Salaries Tax
• Stamp Duty
• Property Tax

Unlike other countries/regions, Hong Kong does not apply word-wide tax and does not have the following taxes:

• Sales Tax
• Value Added Tax (VAT)
• Dividend Tax
• Capital Gain Tax

The person in charge of the business shall submit a tax return to the Inland Revenue Department every year. The tax return of the limited company or partnership is generally issued in April of each year and the salaries tax return is usually issued in May of each year from Inland Revenue Department. The deadline for submission of tax returns is 1 month.