Hong Kong is a haven for investment because of its sound business policies and political stability. By operating as a Special Administrative Region of China, Hong Kong has developed a special attraction of investors.
Whether you operate a company, run a startup business, or work under an investment visa among others, one of the things to get right is tax obligation. Well, even before applying for a visa or registering a company, dig deeper to know what tax, when to pay, and how to pay.
In this post, Non-resident: What about your tax obligations, all the information you need to know about taxes are discussed. Keep reading to learn about business registration, stamp duty, property tax, and profit tax.
Under the Business Registration Ordinance, every person running a business in Hong Kong should apply for registration within 4 weeks of commencement. A Business Registration Certificate issued to such business should always be displayed. In the event that the particulars of the business have changed, the Inland Revenue Department must be notified within 4 weeks.
The main reason that all businesses are required to register a business is not for regulation purposes. Rather, it is used by the Inland Revenue Department to get information about businesses to open files and update them on time. Besides, the registration allows public to get all the information they want about respective businesses.
People, parties, and businesses such as partnerships, bodies of professionals and even trade organizations in Hong Kong are required to pay taxes on profits they make in the country.
If you get income from selling products or offering expert services, Hong Kong administration considers you to carry some trade. A person who is employed is seen as a sole proprietor or partner at the workplace.
When it comes to profits tax, all must pay (both residents and non-residents). The only time you are not liable to pay profits tax is when the profit you make is derived from abroad. For business operators, it is important to have clear operational records for the last 7 years.
Property Tax and Stamp Duty
For people with rental properties and get gainful income from letting, they are required to pay property tax. Property owners are required by IRD to keep records of their income for at least 7 years as evidence of income. When IRD sends you tax return forms, they must be filled and submitted back even if the rental facility does not have any income.
The Stump Duty Ordinance requires that people pay duty on various types of documents like the conveyance of sale, residential property sale agreement, lease of immovable property, and any documents on Hong Kong stocks transfer.
This is very important especially for new investors who are increasing their investment portfolios to properties and capital markets.
Personal assessment is an evaluation meant to help a taxpayer get the reflection of the amount of tax he/she is required to pay. If you feel that you are paying more than you should be, it is advisable to apply for personal assessment to reduce the overall tax burden especially on property tax and profit tax.
Hong Kong administration requires all people and businesses to ensure they pay their taxes so that they can get better services at all times.
As a legal requirement, investors should know that failing to remit the requisite tax to the government is illegal. From this post, Non-resident: What about your tax obligations, it is clear that you need to pay the taxes on time and keep the records in case IRD wants to peruse through.