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Profit Tax
According to Article 14 of "the Inland Revenue Ordinance", any person carrying on any trade, profession or business, who gains the assessable profits arising in or derived from Hong Kong (except the profits through selling the assets of a capital nature), is liable to pay profit tax. The income derived from overseas, even if which is remitted to Hong Kong, is still no need to pay profit tax. The persons concerned of the tax residence status, generally do not matter with whether paying profit tax.
As to whether operating trade, profession or business in Hong Kong, we must understand all the facts clearly before making judgments. Similarly, whether the income or profits are derived from Hong Kong, we must understand all the facts clearly before making a decision. In principle, the source of profits should be decided by the location of the profitable operation of the business. This concept of origin in the application caused a lot of controversy between the taxpayers and the IRD. Therefore, in March 1998 the Inland Revenue Department amended and issued NO.21 interpretations and guidelines of the provisions of the Inland Revenue Department, and carefully listed in a variety of circumstances, the Inland Revenue Department's points of view about the source of profits. In addition, the Inland Revenue Department would provide an advance ruling service on the source of profits from April 1998.
Assessable profits may be adjusted and calculated by the profits and loses listed by the accounting records under the Inland Revenue Ordinance. Adjustments generally include that excluding accounting depreciation and using the tax-deductible depreciation allowances instead. Private expenditure, capital costs and taxes under the Inland Revenue Ordinance are not deductible. Generally dividends do not need to pay profits tax and withholding tax. In the category of the profits tax, the concept of "person" include corporations / Limited, sole proprietor, partnership business or trustees, etc., self-employed persons are also included.
The taxed, there is no difference between the resident and non-resident persons in HK. Therefore, those who have lived in Hong Kong are no need to pay tax on the profits from overseas; the other hand, a non-resident who has earned the profits arising in Hong Kong shall be taxable.
