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Does Your Business Qualify?

Hong Kong Tax Credits and Incentives Before investing in Hong Kong and SAR region, it is a good idea to familiarise yourself with the tax credits and incentives that are applicable to foreigners.

The Hong Kong SAR region is officially known as the Hong Kong Special Administrative Region (SAR) of the People’s Republic of China. It practices a “one country and two systems” approach. In 2018, the Inland Revenue (Amendment) (No. 7) Ordinance was put in place. This was meant to help enhance the tax deductions for the research and development (R&D) sectors that qualified. If your business plans to engage in R&D, you might reap the benefits of this regime.

What Are Hong Kong Tax Credits?

There are foreign tax credits available in the country. This is applicable if the foreign taxes are paid or payable on any income that is derived from a jurisdiction. This jurisdiction must have entered a CDTA with the Hong Kong SAR. That same income must also be subject to tax in the Hong Kong SAR region.

If you are planning to do business or work in Hong Kong, foreigners are advised to minimise their foreign payable tax. You should aim to do this before filing a tax credit claim.

What Are Hong Kong Incentives?

There are also foreign investment incentives available. However, there is no specific incentive for foreign investments. The only exception to that is offshore funds. These funds may be exempted under certain conditions and they will not be subject to profit taxes.

Tax incentives are available for the R&D sector. Your business may qualify if you fall into any of the following categories:

Your activity involves experiments and investigation that is done specifically to study the feasibility and relatability to the business, management, or market research.
Your activity involves the natural or applied science fields.
Your activity involves acquiring new technical or scientific understanding and knowledge.
Your activity involves planning or introducing new and improved products, materials, processes, devices, systems prior to commercial production.

Planning to Do Business in Hong Kong?

Start your business venture in Hong Kong working alongside the experts in the industry. Navigating the world of tax and legal matters can be tricky if you don’t know what you’re doing. Luckily, we do. We make it our business to know everything there is to know about running a business. This puts us in the best position to guide you toward success. For more information about our services, contact the 3E Accounting team today.