Hong kong tax system overview governing authority the inland revenue ordinance (iro) is the governing statute regarding corporate and individual taxation matters in hong kong. Regarding the tax system in hong kong, companies registered are not taxable if no transaction is carried out in hong kong.
The tax system in hong kong companies registered in hong kong are not taxable provided that no transaction is carried out in hong kong if this is not the case, the tax rate rises to 165% on profits made during the year. Moreover, the peculiar structure of hong kong's tax system makes it impossible for the government to effect substantial increases in the territory's famously low rates of tax, even if the people wanted it to do so (or so, at least, the government has maintained. Hong kong taxation system hong kong offers significant tax advantages including a simple tax system, low rates of taxation and the opportunity to earn tax-free profits for companies engaging in international business activities.
Territorial source principle of taxation hong kong adopts a “territorial source principle” of taxation only profits which have a source in hong kong is chargeable to tax under the iro profits sourced elsewhere are not subject to hong kong profits tax. Hong kong adopts a one-tier taxation system, which means that all dividends are exempt in the shareholders' hands withholding tax on dividends no withholding tax is imposed on dividend paid by companies resident in hong kong either to local or foreign recipients. Under article 108 of the basic law of hong kong, the taxation system in hong kong is independent of, and different from, the taxation system in mainland china in addition, under article 106 of the hong kong basic law, hong kong enjoys independent public finance, and no tax revenue is handed over to the central government in china.
Conditions companies registered in hong-kong are not taxable if no transaction is carried out in hong kong if this is not the case the tax rate rises to 165% on profits made during the year. Hong kong adopts a territorial basis for taxing profits derived from a trade, profession, or business carried on locally, and the profits tax rate is 825 % on the first $2 million of profits and 165% on any profits above that amount. Analysis of tax system of hong kong, corporation tax, withholding tax, taxation of dividends, group relief, vat, taxation of interest and royalties. Another reason for studying the history of hong kong's tax system is that it is a flat tax system (or, to be strictly accurate, it is, as will be seen, both proportional and progressive) its successes (and its failures) therefore bear directly on the debate over the respective merits of proportional and progressive taxation.
Taxation in hong kong the inland revenue ordinance (chapter 112) (iro) provides for the levying of three separate direct taxes for a year of assessment which ends on 31 march.
Brief history of tax evolution in hong kong the inland revenue ordinance (iro) was first enacted in 1947 to impose income taxes in hong kong this was based on the legislative package developed by the uk for its colonies as a result the iro bears resemblance to the tax legislation in uk, australia, south africa and other commonwealth countries.