A new tax policy unit within the Government will consider the implementation of a new set of tax breaks for small companies in Hong Kong
. New Chief Executive, Carrie Lam, first introduced the proposal. Our company formation agents in Hong Kong
can give you more details on these proposed tax breaks and whether or not the system will apply to your business.
New tax relief for small businesses
The Government is taking into consideration a proposal to introduce a new tax relief policy for small and medium companies. The measure would mean that a new two-tier tax rate system would be implemented for these types of businesses. Additionally, there would be more tax deductions for research and development.
Hong Kong’s new Chief Executive first introduced the proposal. According to her suggestion, the profits tax
would be lower for the first 2 million HK$, as opposed to the current, fixed rate.
The Government will need to consult the stakeholders concerned by the implementation of this measure before the two-tier corporate tax system can be introduced.
Investors who open a Hong Kong company
can still benefit from a lower rate for unincorporated businesses. The current tax incentive system in Hong Kong allows for a special deduction for R&D expenditure.
The taxation of companies in Hong Kong
Hong Kong has a low taxation regime
and a special corporate tax rate for unincorporated businesses: 15% as opposed to the general rate of 16.5%.
Other taxes for companies in Hong Kong include the real property tax, the social security, and the stamp duty. Hong Kong has a low taxation regime: there is no withholding tax on dividends or interest, no capital gains tax, no transfer tax, and no payroll tax.
Company formation in Hong Kong is straightforward. Registration is needed for obtaining a business certificate and for tax purposes.