Hong Kong is a free port of international trade, with a simple tax system and a low tax rate. For offshore companies in Hong Kong, the only tax that must be paid every year is profits tax. The so-called profit tax is levied according to the taxable profit of the tax year (that is, the net profit of an accounting year).

The newly registered Hong Kong company will file tax returns about 18 months after its establishment, and then file tax returns once a year.

All persons, including corporations, partnerships, trustees or organizations, who carry on any trade, profession or business in Hong Kong and obtain all profits arising in or derived from Hong Kong from such trade, profession or business (except profits from the sale of capital assets) are required to pay taxes, and there is no difference between Hong Kong residents and non-Hong Kong residents. Therefore, an important thing for all Hong Kong companies to do every year is to declare profits tax to the Hong Kong government.

At present, in order to support small and medium-sized enterprises, Hong Kong has implemented a dual tax system. The specific policy requirements are as follows:

1. When the net profit of a Hong Kong company in a fiscal year is less than HK$ 2 million, the tax rate is only 8.25%.

2. When the net profit of a Hong Kong company exceeds HK$ 2 million in a fiscal year, the tax rate of the first HK$ 2 million net profit is still 8.25%, while the tax rate of the net profit above HK$ 2 million is 16.5%.

For example, a Hong Kong company has an annual turnover of HK$ 50 million, a gross profit of HK$ 5 million and a net profit of HK$ 3 million. Then the profits tax that this Hong Kong company should pay to the Hong Kong Inland Revenue Department is:

Top 2 million x 8.25%+(3 million-top 2 million) x16.5% = HK$ 330,000.

That is, when the annual net profit of a Hong Kong company is 3 million, it only needs to pay HK$ 330,000 to the Hong Kong Inland Revenue Department, and the tax rate is quite low.

If the Hong Kong company did not operate or lose money in that year, it would not need to pay taxes, but the accounting audit should still be carried out normally.

Hong Kong adopts the principle of source and taxes the profits of any industry, profession or business engaged in Hong Kong. Only profits generated in or derived from Hong Kong are subject to profits tax. In short, anyone who does business in Hong Kong, but whose profits come from places outside Hong Kong, is not required to pay tax on the profits made in Hong Kong.