A bit confused here... I was just wondering if a hong kong company has an emi with bank accs in other countries other than hk, does that mean that its profits are exempt from tax? everything online seems to discuss foreign income received in hong kong- but in this case the income is not received in hong kong. Any advice?
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Hong Kong Company- Money not received in Hk- no taxes?
- Thread starter dha145
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Lots of info there: IRD : Foreign-sourced Income Exemption
Even China has become the b* of the OECD, sad.
Even China has become the b* of the OECD, sad.
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No. Things are more complicated. They have always been. It really depends on what you are doing, how big the company etc. Only offshore income is exempt and you have to explain why you considered it offshore. In short it does not matter if the money reaches Hong Kong it not. If you are a single person you will have to pay tax in Hong Kong if you are working there. If not, you will have to pay tax where you worked and supply the proof to be exempt. Got bigger companies things get more complicated and compliance will cost quite a lot.
Thanks Daniels for sharing that experience.
How would it go in your opinion, if the director of the HK company (control and management) would be some kind of director from a 0% taxation country where no tax is to be paid, and the core activity would be outsourced outside of HK ? In term of HK taxation and in term of if you loose (with such setup) the possibility for the HK company to be a HK tax resident company (even though without paying tax).
You mean the core activity would be offshore from Hong Kong? It would work as long as you can proof you declared the income in your residence.
But then you may as well to the same in BVI. Or in Singapore if you want reputation. They both have no audit or an exemption for turnover under 10M SGD.
But then you may as well to the same in BVI. Or in Singapore if you want reputation. They both have no audit or an exemption for turnover under 10M SGD.
This is new?!? I first time listen this " It would work as long as you can proof you declared the income in your residence." And for HK and also for BVI??? Who says that? Thank you
Thanks Daniels. Yes the core activity would be offshore from HK as the activity is to invest or play with commodities / financial derivatives markets outside of HK. But in any case, the whole objective would be to pay 0% corporate tax so providing proof that profit has been taxed somewhere else would not be possible, and it seems to be an issue from your experience.
In my case reputation is kind of irrelevant (but I don't wish to use jurisdictions which impose to deal with a registered agent because it lacks control in my taste, like BVI) but if Singapore does not ask for proof of taxation elsewhere of the foreign sourced income, this might be interesting for me. As long as they don't have some kind of OECD requirement of economical substance that the activity cannot be outsourced outside of the country to be tax exempt (I have seen that in some jurisdictions). Thanks again for your messages.
I think it has been like this for some time in Hong Kong.
Has anybody with a Hong Kong company been through an Offshore Profits claim?
I’ve just hit the 18-month mark of business in Hong Kong ready to submit by first Profit Tax Return. I also have the option of filing an Offshore Profits claim. The Offshore Profits claim itself seems to be a convoluted, long drawn-out process with significant costs to bare in working with a...
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But boy I think it is the same with all tax authorities. If you claim to be offshore because you live in X, they can't let this go just like that. Unless of course the tax rate in X is zero.
Yes what if you live in a country with 0 tax or a country that taxes only local income (and very high)?
Then you are probably evading taxes. In this case most likely the Hong Kong company technically forms a local PE and you would be subject to some sort of contributions.
There are very few countries which have no contributions at all.
Why evading taxes? Assuming you leave in a country with 0% taxation, or a country that does not tax any worldwide income / income outside of this country (of tax residence). so the tax is 0%.
And you have a company in an offshore region BVI, Belize, Saint Kit, UAE (till last year) with 0% tax. As long as the country of residence do not need you to declare anything made outside of it, where is the tax evasion???
Check the laws. BVI has social contributions to pay if you work on the island. Same for St Kitts and Nevis. Belize has an income tax. They do want that money if you reside there and are running a business from there.
Yes understand, I mean if you live in Kuwait, Bahrain, Saudi that has 0% tax, and they don't care about worldwide income at all, where is anything illegal at all having a company in BVI, Belize, Cayman, St. Kitts and working using this company and paying 0 tax at all? Where is the illegality if the country of residence does not care for wordwide income, CFC, PE and all these things at all? and you have a company in St. Kit for example - 0%. Where is the tax evasion? Where is something lllegal?
Thank you!
Thank you!
I initially wrote "probably". There are countries which have 0 tax an income and 0 tax on profits and no social contributions. But the list is quite short and the BVI etc are not in it. They will want money from your Hong Kong company that you run from there.
Please note that the topic here is about an offshore Hong Kong company. Of course it is not illegal if your residence really does not tax you. Just be aware that 0% income tax does not mean that they do not tax salaries in form it social contributions nor profits from your (foreign) Hong Kong company. And yes, Bahrain, Kuwait and Saudi all will want money.
Thanks @daniels27 , on what basis Bahrain, etc will waint money, I don't understand. They don't care for worldwide income, they don't have CFC rules and all these. How they will want money? There are no salaries, I use the company for my own for selling services & consulting. I assume i will just have to pay my self as dividends or payments but not salaries. Again Bahrain does not care at all for this income. Where is the illegal part? Thank you again!
Bahrain is one of the easier ones. Also the social contributions are capped at 4000 I think. The are in negotiation of a double taxation treaty with Hong Kong, most likely once in effect your company will then be considered to be a permanent establishment in Bahrain and taxable there. This in turn will lead to the said social contributions.
I would not be too worried about Bahrain and a few select other countries. But for the majority of the countries, I would worry more.
I would not be too worried about Bahrain and a few select other countries. But for the majority of the countries, I would worry more.
Sounds good. Thanks for letting me know. Are you living in Bahrain? I may join you for lower taxes then. How is it?
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