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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