Hong Kong - Establishing a Business - E. Taxation

1. Introduction

Taxation on income in Hong Kong is imposed by the Inland Revenue Ordinance ("IRO"). There are three separate types of tax - Profits Tax, Salaries Tax and Property Tax.

Liability to tax will arise, as a general rule, when certain types of income have their source within Hong Kong. In general, income which arises or is derived from outside Hong Kong will not be assessed to tax by the Hong Kong Inland Revenue Department.

2. Principal Taxes

Profits Tax is charged on every person or company carrying on a trade, profession or business in Hong Kong in respect of assessable profits arising in or derived from Hong Kong from the carrying on of that trade, profession or business in Hong Kong. For a Profits Tax liability to arise, a person has to carry on business in Hong Kong and have a source of profits arising in or derived from Hong Kong. Certain sums are deemed as sums arising in or derived from Hong Kong (for example, payments for use in Hong Kong of trademarks