(1) Overview of Hong Kong tax system
[Ans: Tax representative refers to a person authorised by a taxpayer to act on his behalf for the purposes of the Inland Revenue Ordinance. The authorisation must be made in writing and bear the taxpayer’s signature. For this purpose, authorisation merely by an email is not acceptable.]
[Ans: Under the Hong Kong tax law, records (English or Chinese) of a taxpayer’s income and expenditure should be retained for a period of not less than 7 years.]
(4) Revenues and expenses
[Ans: For individuals – along with various allowances available, an individual taxpayer may claim other deductions under salaries tax and personal assessment.
For companies – generally, all outgoings and expenses, to the extent to which they have been incurred in the production of chargeable profits, are allowed as deductions.]
[Ans: There are different types of tax benefits in Hong Kong. For example, taxpayers, upon satisfying certain criteria and requirements, are entitled to tax allowances, tax claims, tax deductions and tax concessions.]
[Ans: Hong Kong tax reduction reduces profits tax, salaries tax and tax under personal assessment by 75% subject to a ceiling. The reduction ceiling may differ each year pending legislative amendments as proposed by the Financial Secretary in the Financial Budget. For example, the reduction ceiling is HK$20,000 for 2014/15 to 2016/17, and the ceiling is HK$30,000 for 2017/18. For 2018/19 and onwards, 100% of the salaries tax and the profits tax are waived subject to a ceiling of HKD20,000 per case. In addition, corporate taxpayers are entitled to the two-tiered rates where profits up to HKD 2 million is subject to 8.25% tax rate, the remainder is subject to the normal 16.5% tax rate.]
[Ans: Exemption or relief is only granted upon application with supporting documents provided to the Hong Kong Inland Revenue Department.]
[Ans: In general, tax planning in Hong Kong involves placing tax efficient structure in place, often involves one or combination of shareholding structure, benefits under tax treaty, offshore income claim, and tax efficient remuneration package.]
[Ans: Salaries tax is the same for both Hong Kong locals and foreign expats. Nevertheless, there are slight difference regarding the tax treatment. For example, earnings from a non-HK directorship are exempt from Salaries Tax. In addition, if the foreign expat spent considerable time rendering services outside Hong Kong, the he or she may seek complete/partial exemption from tax or claim for tax credit, or if the expat has a non-HK employment he or she may be qualify to be assessed on a days-in-days-out basis.]
[Ans: Hong Kong adopts a territorial basis of taxation, as such, regardless whether you are a US citizen, any income you derived in Hong Kong will be subject to Hong Kong tax whereas any income derived elsewhere outside of Hong Kong will not be subject to Hong Kong tax.]
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