Hong Kong remains the most efficient jurisdiction for international trade: tax is paid only on Hong Kong-sourced profit, the rate is two-tier and there is no VAT at all. Here are the numbers and the offshore rules.
Hong Kong business taxes
| Tax | Rate | Comment |
|---|---|---|
| Profits tax | 8.25% / 16.5% | 8.25% on first 2M HKD, 16.5% above |
| VAT / GST | None | Only a small business registration levy |
| Dividends | 0% | No dividend or capital gains tax |
| Salaries tax | Up to 15% | On directors' and employees' HK income |
| Business registration levy | ~0.1% | Annual business levy |
Compare in the tax calculator.
Territorial principle and offshore claims
Hong Kong taxes only profit sourced in Hong Kong. If contracts are signed, goods shipped and clients located elsewhere - file an offshore claim and that profit is not taxed at all. This is a legal tool, not a scheme: the IRD checks reality - contracts, correspondence, shipping routes. Classic case: sourcing in China, selling to Europe through a Hong Kong company, offshore claim on the trading margin.
Who a Hong Kong company fits
- International trade and re-export - no currency control, accounts in dozens of currencies.
- Holdings and IP ownership - 0% dividends, strong banking reputation.
- Settlements with China - a HK account receives payments from mainland companies faster and cheaper than any other.
Opening and costs
- Limited registration - 5-7 days, remote, from $1,000.
- Annual filings and audit are mandatory (unlike many offshores).
- Banks: HSBC, Standard Chartered, Bank of China HK; virtual banks (ZA Bank) work for a start.
Running costs: accounting + audit $1,500-3,000/year, business registration ~$300/year.
Typical mistakes
- Offshore claim without documents - the IRD refuses and back-charges 16.5%.
- Running mainland operations through a HK company without proper structuring - PRC currency rules are violated on the counterparty side.
- Ignoring the audit - fines and registry strike-off.
FAQ
Hong Kong or mainland China?
Full comparison in a dedicated article: Hong Kong for international business, mainland for operations inside China with the 5% incentive.
Need an office and staff?
For a pure holding - no, a secretarial company is enough. Offshore claims require real operations, not office walls.
How to withdraw profit?
Dividends are tax-free in Hong Kong; beyond that, the recipient's tax residency decides (CFC rules of your country).