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.
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