Application for Offshore Tax Exemption
Companies that earn profits outside of Hong Kong can apply for offshore income tax exemption. As long as the company's profits do not originate in Hong Kong but are derived from overseas business, they can apply to exempt this portion of income from profits tax. Applying for offshore income tax exemption requires meeting certain conditions and following specific procedures; therefore, it is recommended that companies seek professional tax advice to ensure the compliance and effectiveness of their declarations.
Requirements for Offshore Tax Exemption
The profit-making activities of the business must be carried out outside Hong Kong. Taking the trading industry as an example, the following activities need to be carried out outside Hong Kong:
1. Sales and Marketing
2. Procurement
3. Inventory
4. Loans
Notes
It is worth noting that in recent years, the authorities have become more rigorous in the process of investigating companies' overseas taxes, so it is difficult to successfully apply for exemption. Our professional assistance can improve the success rate. Welcome to contact us for further enquiries.
Many customers think that after the offshore tax exemption is approved, the Company will have a "death-free gold medal" and will not have to pay taxes on all businesses it operates. In fact, the IRD will re-examine the Company's business every three or four years.
After many companies applied for offshore tax exemption, although they did not receive a tax bill that year, the application was actually not approved. Therefore, the applicant's company must ensure that it has sufficient liquidity to cope with the risk of not being approved and having to pay taxes. Please contact us for details.