Hong Kong is an investor’s paradise. No matter what you consider a premium investment hub, Hong Kong has it. It has a very supportive administration, state-of-the-art infrastructure and is strategically located in the heart of Asia. In addition, access to the Chinese market of more than 1.4 billion people is easy based on the Closer Economic Partnership Agreement (CEPA) with China.
The benefits of this important jurisdiction might be the primary attraction, but you need to comply with all policies and laws in Hong Kong to enjoy them. However, accounting and filing tax returns for foreign companies in Hong Kong can be tedious and complex. This is why you need to use Fiducia tax and accounting services in Hong Kong.
A Deeper Look at the Hong Kong Tax System
All companies incorporated in Hong Kong are required, under the Hong Kong Companies Ordinance, to correctly maintain their financial records and comply with all audit requirements. Hong Kong uses its own Financial Reporting Standards Framework (HKFRS), which is a derivative of the International Financial Reporting Standards (IFRS).
When it comes to taxes, Hong Kong follows a two-tiered tax system where corporate tax is based on the amount of revenue. Under the system, the first HK$2 million of taxable income attracts a corporate tax of 7.5%, while anything above that amount is charged the normal rate of HK$16.5%.
The Hong Kong Institute of Certified Public Accountants (HKICPA) is responsible for managing the accountancy profession in the jurisdiction. However, the Inland Revenue Department (IRD) is responsible for all matters of taxes. Remember that the policies, rules and guidelines of these institutions are implemented in line with the requirements of the Hong Kong Companies Ordinance.
The main taxes that your company needs to comply with include:
- The standard corporate tax is 16.5%.
- Stamp duty of 4-15%
- Hong Kong does not have withholding taxes on interests and dividends.
- Hong Kong has signed double tax agreements (DTAs) and tax information exchange agreements (TEAs) with multiple countries across the globe. The tax and accounting services can help you interpret these DTAs and take advantage of them to avoid making unnecessary payments.
Special Benefits of outsourcing Tax and Accounting Services in Hong Kong
For most companies operating in Hong Kong, the stiff competition and focus on progressive development mean that a lot of effort is needed for success. This leaves them with little or no time for tax and accounting. But this is not the only reason why more companies in Hong Kong opt to work with expert firms in tax and accounting services. Here are the additional benefits of working with experts.
- Tax and accounting work is handled by professionals conversant with the Hong Kong Financial Reporting Standards Framework (HKFRS).
- The experts work with the latest and most advanced accounting programs, such as XERO, making it possible to complete the reporting jobs fast. Even if the deadline for submitting financial audits or filing tax returns is very close, accounting experts at Fiducia can manage to get the task done to help your company avoid penalties.
- Tax and accounting services can help to keep the cost of accounting low because you do not have to permanently employ expert accountants. The firm you contract will be in charge of their salaries and maintaining the accounting hardware.
- The firm can also help your company to craft good strategies for success. Having helped other firms to succeed in Hong Kong, the professionals know what works and what does not. So, you can count on them to enrich your strategies.
- The accounting professionals will be very useful in helping your company to comply with emerging demands for sustainability reporting. For example, Hong Kong now requires all listed firms to produce annual sustainability reports.
Hong Kong market offers an awesome springboard for companies to reach the lucrative Far East market, and Fiducia can help you achieve this goal. With Fiducia’s tax and accounting services in Hong Kong, you are assured of full compliance with related policies, crafting the best strategies, and accelerated growth. The experts can also help you with payroll management and carrying out due diligence for your company.
Keyword: China consulting and market entry strategy