Q:
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Is it necessary for an offshore company to pay profits tax?
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A:
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According to IRO, offshore company needs to pay profits tax. Yet, whether the profit tax will be charged or not depends on the character and degree of its activities in Hong Kong.
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Q:
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May you tell me when an offshore company needs to pay profit tax?
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A:
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Usually, whether the profit tax will be charged or not depends on the source of the profit. This situation is also applicable for Hong Kong companies and those incorporated overseas.
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Q:
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May you tell me the way IRD determines the place where that company is running?
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A:
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This is decided case by case. Yet, you are reminded that a company does not necessarily have lots of business in Hong Kong to make IRD determining the place that company is running in Hong Kong or not. The activities of the company’s agents in Hong Kong are also concerned.
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Q:
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May you tell me how IRD determines the source of profit?
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A:
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Usually, they will decide the source of profit based on where the profit arisen or from.
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Q:
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Should an offshore company submit audited accounts with profits tax return?
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A:
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If it is not required by law for audited accounts, IRD will accept the incorporated company to hand in unaudited accounts as evidence for the tax return. Yet, if the account is audited, even it is not required by the law, you should hand in the audit accounts with the tax return.
If there is a branch of an offshore company in Hong Kong, while the head office is set outside Hong Kong, in general case, IRD will allow unaudited branch accounts, and do not require the audited world-wide accounts. Yet, in some cases, the assessor may ask you for a copy of the audited world-wide accounts.
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FAQ
