The major taxes currently in force in Hong Kong include:
● Profits Tax - Assessable profits derived from Hong Kong (standard rate)
● Salaries Tax - Employment income earned in Hong Kong (progressive tax rate or standard tax rate)
● Stamp Duty - Taxes on real estate transfer, leases and stock transfers
Hong Kong currently does not have GST, dividend tax, and capital gain tax and income earned outside of Hong Kong generally do not have tax implication.
As such, Hong Kong attracts a large number of overseas enterprises to set up their business and make good use of Hong Kong's tax system for tax planning purpose to reduce the overall tax burden on the Group. Examples include:
● Tax avoidance using different tax vehicles (individuals or companies have different tax deductions, tax rates, etc.)
Tax planning is not only tailor made for multinational corporations. In general, small and medium enterprises can also increase their cash flow through tax avoidance so that they can reinvest in their own businesses.
Keep in mind that tax planning is through tax avoidance rather than tax evasion.