Q:
|
Is a company incorporated outside Hong Kong liable to pay Hong Kong profits tax?
|
|
A:
|
The Hong Kong Inland Revenue Ordinance (“IRO”) contains no exemption from profits tax for offshore companies. Whether an offshore company is liable to profits tax depends on the nature and extent of its activities in Hong Kong.
|
Q:
|
Under what circumstances is a company incorporated outside Hong Kong liable to profits tax?
|
A:
|
Generally, a company is liable to profits tax if it carries on a trade, profession or business in Hong Kong and has profits arising in or derived from Hong Kong from such trade, profession or business. This applies equally to Hong Kong companies and those incorporated overseas.
|
Q:
|
What are the reporting requirements for an offshore company carrying on a business in Hong Kong?
|
A:
|
A company incorporated outside Hong Kong but carrying on a business in Hong Kong is subject to the same reporting requirements as a Hong Kong company. For example, the offshore company has to register its business with the Business Registration Office of the Inland Revenue Department (“IRD”) and to furnish profits tax returns issued to it.
|
Q:
|
Is it necessary for an offshore company to submit audited accounts when it files its profits tax return?
|
A:
|
Where the company is incorporated in a jurisdiction whose laws do not require accounts to be audited and no audit has been performed on the company’s accounts, the IRD would accept unaudited accounts filed in support of the return. However, if an audit has actually been carried out notwithstanding that there was no such requirement under the laws of the relevant jurisdiction, the audited accounts should be submitted with the return.
|
Q:
|
How can an offshore company be more certain about whether its activities will give rise to profits tax liability?
|
A:
|
The company may consider applying for an advance ruling under section 88A of the IRO in respect of a contemplated transaction or arrangement.
|
FAQ
