Hong Kong

Tax System Overview

Hong Kong operates a pure territorial tax system. This means that only profits arising in or derived from a trade, profession, or business carried on in Hong Kong are subject to tax. Foreign-sourced income is entirely tax-exempt.

Corporate Taxation

The standard corporate rate is 16.5%. However, under the two-tiered profits tax rates regime, the first HKD 2 million of assessable profits are taxed at half the rate (8.25%).

• Capital Gains: 0%
• Dividends: 0% withholding tax.
• VAT/GST: None.

The defining challenge of Hong Kong is not the tax code, but the banking sector. Opening a corporate bank account for a newly formed entity without physical substance in Hong Kong is notoriously difficult.

Geopolitical Shifts

The implementation of the National Security Law has shifted the risk profile of Hong Kong. While the tax code remains highly favorable, international businesses must now weigh the political and legal risks alongside the tax benefits.