7/26/2021 0 Comments Hong Kong Tax RatesHong Kong taxation is based upon two systems: a" VAT" (" Value-of-Trade Tax"), and a" General Excise" (" Excise Duty"). Under Article 108 of the Basic Law of Hong Kong, the taxation regime in Hong Kong is distinct from, and independent from, that of mainland China. Consequently, although both enterprises in Hong Kong are subject to taxation according to the laws of the Chinese Government, the latter's indirect regulation of Hong Kong trade makes Hong Kong taxation much more complicated and cumbersome than it would have been if the two systems had been kept in conformity with the Basic Law. Hong Kong taxation is complex and difficult to understand. This is understandable: the Basic Law explicitly says that the tax services in Hong Kong should not be subject to indirect taxes or Excise duties. Thus, taxation in Hong Kong is a complex area involving many issues of interpretation. The most common types of indirect taxes are sales tax, value-added tax, property tax, and local government taxes. The type of tax depends on the location and size of the enterprise: general tax, salary tax, income tax, or sales tax. The taxation system of Hong Kong is highly complex, but fortunately, not confusing, thanks to the meticulous efforts of its legislature. Hong Kong statutory law provides for several types of indirect taxes. These include customs and central Excise duties, land tax, estate tax, stamp duty, factory gate tax, property buyer tax, central board tax, land and house rent tax, and mortgage tax. A number of specialized rules govern the collection and payment of these taxes, including the determination of the tax rate, the application of rules relating to foreclosures, and collection of payments. Basic Hong Kong taxation rules are generally adapted from the British system. Thus, profits from the sale of goods are subject to the Excise duty. Business profits are liable to the Stamp Duty. The Hong Kong central government has consistently applied the main provisions of the British system in the area of business taxation. There have been instances, however, where the government has attempted to supplement the income tax by supplementing the income tax with an additional charge known as the'Hong Kong Stamp Duty', whereby the profits from the sale of stamps are exempt from income tax. Click here for more details on this topic. The main differences between the income tax of Hong Kong and that of a normal country are its corporate tax and its property and wealth tax. Profits paid to the central government are exempt from income tax, while income paid out to employees of a company is liable to the property and wealth tax. Companies are generally restricted in the amount of assets they can buy under the limit, so that the percentage of profit that can be taxed is higher in Hong Kong than in many other jurisdictions. However, this is offset by the absence of corporate taxation on the profits paid by a Hong Kong company to its foreign subsidiary. There are two bodies that regulate the taxes levied in Hong Kong. The Hong Kong government also takes a major role in deciding the rates by which the taxes are imposed. This post: https://www.britannica.com/topic/taxation elaborates more on the topic, so you may need to check it out.
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7/26/2021 0 Comments Hong Kong TaxationUnder Article108 of the Basic Law of Hong Kong, the taxation system in Hong Kong is separate from, and distinct from, the tax system in mainland China. The Basic Law also sets out the system of taxation in Hong Kong for both local people and companies. The legislature of Hong Kong must approve all laws relating to taxation before they become part of the Basic Law. The legislature normally consists of an assembly or a commission, each of which is elected for a four-year term. The chairperson of the legislature is usually a non-party member of the House of Representatives or of the Council momentary. Click here hktax for more details on this topic. Hong Kong taxation is generally based on a tax system that is based on land use fees, including taxes for improvements to roads, public utilities and housing and personal belongings. The Personal Income Tax includes all incomes not exceeding a prescribed limit, inclusive of income from interest and dividends and capital gains from sources outside the personal possessions of the person who earned the income. The highest rate of income tax is 33% for taxable incomes above a fixed limit. A few other taxes in Hong Kong include property taxes, import duties, local taxes, inheritance taxes, corporate taxes and stamp duties. The hong kong tax system has two main channels of taxation: individual taxes and company taxes. The type of tax determines the amount of tax payable. For instance, a Hong Kong salary tax for corporate-level employees will be different from that of personal wages. The Hong Kong income tax system also incorporates an "inland revenue" tax, which is charged under the powers of the customs and Excise Department. There are two main types of taxation in Hong Kong: general taxes and service taxes. General taxes are collected by the Hong Kong central government and forwarded to the different local bodies for payment. These include the Excise Department for general public functions like stamp duty and local taxes. Service tax, on the other hand, is a percentage of the gross salary of an employee and is collected by the employer. Service tax is one of the lowest levied taxes in the world, with only Japan and Singapore imposing higher rates. Hong Kong's tax regime is administered under the supervision of its taxation and customs administration. Hong Kong's colonial government introduced a series of tax amendments in 1950, including the provision of a local income tax. Among these tax amendments is the Tax Administration Ordinance, or TAO. This is the body that supervises the implementation of Hong Kong's tax legislation, including the Hong Kong Income Office or HOGA, and collects and disburses the taxes listed in the TAO. Hong Kong's taxation system is highly progressive. The statutory tax rate is 33% for corporate and unincorporated persons and a national rate of 15% on salaries and other salaries or benefits of employees. The Hong Kong government also has a taxation system that is based on a dual taxation system. The central government and the local governments levy taxes on property, income, value-added services, inheritances and other tangible assets. A number of companies and individuals have realized substantial savings through incorporating themselves in Hong Kong. Many businesses conduct business through a number of offshore entities to minimize their taxation exposure. Find out more details in relation to this topic here: https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/taxation/income-tax. 7/26/2021 0 Comments Hong Kong TaxationThe role of taxation in modern economic development in Hong Kong cannot be understood without reference to its role as a mechanism for socialization of income and wealth. As in the whole range of economic activity, taxation is used to ensure that resources are used for the benefit of society as a whole. Hong kong taxation also provides revenue for the government and helps maintain public health, education, housing and welfare. Under the Basic Law of Hong Kong ("Articles on taxation"), the taxation regime in Hong Kong is fundamentally different from, and independent from, that of mainland China. This provision is referred to as "parastatistical" in some quarters. Parastatistical means taking account of individual income and expenditure. In the Hong Kong context, this also includes taking into account the incomes of people who may not ordinarily fall into the mainstream of taxable income and expenditure categories. This does not necessarily exclude them from taxation altogether, however. For example, when a Hong Kong company is listed in the stock exchange (NYSE) or a mutual funds company (managed by a fund manager who is a registered member of the Hong Kong Society of Stock Exchange Agents) it will normally be required to register its name and its office in the offices of the Hong Kong Company Registration Office. This also involves paying a one-time fee, in addition to annual maintenance fees. Most companies will be registered in this manner from the time of their formation up to the present. Failure to comply with these requirements can result in heavy penalties, or in some instances, outright closures. The Registered Office may, for instance, be re-registered with a new name following the dissolution of a company. Follow this lonk https://www.hkwj-taxlaw.hk/ for more details on Hong Kong taxation company. The basic tax law in Hong Kong also covers company profits. Under the general principles of British tax law, profits are regarded as income for the purposes of the income tax. In most cases, though, companies profit using a different system called the 'stamp duty' instead. Stamp duty is a tax on profits paid for the production of stamps. In the case of Hong Kong taxation, profits are only taxable if they were generated directly by the 'sale' of goods and services to customers in Hong Kong. Profits and losses are included in computing for income taxes in the same way that losses are included in computing for income tax. A company's ordinary business activity is treated as its profit or loss. The profit or loss is then divided between capital assets and equity. Equity is comprised of the paid-in capital and the outstanding stock or securities. A company is allowed to depreciate its assets for certain assets like buildings and plant. Basic Hong Kong taxation also covers the values of property, including personal property and the value of the land on which businesses are built. These values are accumulated and processed based on a prescribed schedule and are subject to taxation based on the current market price. Income and profits tax is generally paid by individuals and corporations on their incomes derived from sources within the territorial area of Hong Kong. You can get more enlightened on this topic by reading here: https://en.wikipedia.org/wiki/Tax. |