2. Under what circumstances do offshore companies need to pay profits tax? Generally speaking, if a company operates a certain trade, profession or business in Hong Kong and obtains profits arising in or derived from Hong Kong from that trade, profession or business, it must pay profits tax. This principle also applies to companies registered in Hong Kong and overseas. ?
3. How does the Inland Revenue Department judge whether a company is doing business in Hong Kong? This question must be decided according to the facts. Every case is different. However, it is worth noting that a company does not have to have a lot of business in Hong Kong to be regarded as operating in Hong Kong. In addition, the activities of company agents in Hong Kong can also be considered. ?
4. How does the Inland Revenue Department determine whether a company's profits are generated in or derived from Hong Kong? This should also be decided according to the facts. The general principle is to find out which activities of the company generate relevant profits and where these activities are carried out. ?
5. What are the reporting requirements for offshore companies operating in Hong Kong? Offshore companies operating in Hong Kong must comply with the same reporting requirements as Hong Kong companies. The basic requirement is that the company must apply to the Business Registration Office of the Inland Revenue Department for registration of its business and submit the profit tax return issued by the authorities to the company.
If a company has taxable profits in any year of assessment but has not received the tax return from the Inland Revenue Department, it shall notify the Inland Revenue Department in writing that it is taxable within 4 months after the end of the basis period of that year of assessment.
In addition, the Company shall keep sufficient records in English or Chinese to facilitate the determination of assessable profits, and shall keep such records for at least 7 years after the completion of transactions related to such records. ?
6. Do offshore companies have to submit audited accounts when submitting profits tax returns? If the law does not require an offshore company to audit its accounts in its registered area, and the company's accounts are unaudited, the Inland Revenue Department will accept the unaudited accounts submitted by the company as evidence of tax return.
However, if the accounts are indeed audited, the company should submit the audited accounts and tax returns even if the laws of the relevant regions do not require auditing.
If an offshore company is not headquartered in Hong Kong, but has branches in Hong Kong, the Inland Revenue Department will generally accept unaudited branch accounts without attaching audited global accounts. However, when necessary, the evaluator can request the provision of audited global accounts. ?
7. Does the royalty income of offshore companies need to pay profits tax? Even if an offshore company does not operate any business in Hong Kong, it should pay profits tax on the royalties it receives, if:
(1) Money received for showing or using a film or television film or video tape, any sound recording, or any promotional materials related to the above film, video tape or sound recording in Hong Kong; ?
(2) Money received for using or having the right to use any patent, design, trademark, copyrighted material, secret program or equation or other property of similar nature in Hong Kong, or for teaching or promising to teach to use such patents, designs, etc. In Hong Kong;
(3) Money received for using or having the right to use any patent, design, trademark, copyright material, secret program or equation or other property of similar nature outside Hong Kong, or for teaching or promising to teach to use such patents, designs, etc. Outside Hong Kong,
This amount can be deducted when determining a person's assessable profit under profits tax (not applicable to the amount received or accrued before June 25, 2004).
Under the above circumstances, the assessable profit is 30% of the sum (if the sum was received or accrued before April 1 2003, the tax rate is 10%).
However, if the offshore company is an affiliated company of your company, the taxable profit can be calculated at 100% of the money. The taxable amount is calculated according to the calculated taxable profit and the applicable tax rate. ?
In addition, offshore companies pay taxes in your name, and your company must withhold enough taxes before paying offshore companies according to the provisions of the Inland Revenue Ordinance.
8. What special regulations do offshore companies need to abide by? Basically, offshore companies are treated the same as Hong Kong companies. However, if the company is a non-local resident, you must pay attention to the following:
(1) Non-Hong Kong residents who engage in trade, profession or business in Hong Kong and obtain profits originating in Hong Kong must pay taxes directly or on behalf of their agents.
Taxes will be recovered from the assets of non-residents or collected from agents, who must withhold enough money from the assets of non-residents to pay taxes. ?
(2) If a non-resident receives the royalty mentioned in question 7, he must pay the profits tax in the above manner. ?
(3) If Hong Kong people (including companies) sell goods on behalf of non-Hong Kong residents, they must submit quarterly tax returns to the Inland Revenue Department, setting out the total sales amount, and at the same time pay an amount equivalent to 65,438+0% of the sales revenue to the Inland Revenue Department, or pay a lower amount after reaching an agreement with the Inland Revenue Department. ?
(4) If a non-Hong Kong resident has business dealings with a close Hong Kong resident, and the Hong Kong resident has not made any profit after the arrangement, or the profit is lower than the normal level, the business concerned can be regarded as being operated in Hong Kong by a non-Hong Kong resident. ?
(5) Non-resident people who receive money directly or indirectly from non-resident artists or athletes who perform in Hong Kong are subject to special tax assessment and collection procedures.
Whether a company is a non-resident depends mainly on the facts. It must be noted that offshore companies are not necessarily non-residents. ?
9. How do offshore companies decide whether their activities need to pay profits tax? The Company may consider applying for a pre-determination of the expected transaction or arrangement in accordance with section 88A of the Inland Revenue Ordinance, and pay a fee when applying. For details of the application procedure, please refer to "Guidelines on Interpretation and Implementation of the Hong Kong Inland Revenue Ordinance No.31:Advance Ruling". ?
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