Hong Kong offers a number of tax-related benefits, which have resulted in countless corporations shifting to Hong Kong. The high influx of companies in Hong Kong is because, unlike other countries with a business-friendly tax system, Hong Kong offers access to Mainland China, a market of over a billion people.
From the two-tier tax system to a number of other perks and benefits, Hong Kong is a great place for Americans looking to expand their business to a place with a favorable tax structure. Setting up a company in Hong Kong is quite easy if you go with a trustworthy company formation agency. Get Started HK is one such company formation service, which takes care of all your needs, from a registered office address hong kong to a bank account; it provides you with everything.
The major tax-related benefits that Hong Kong has to offer for Americans are listed below.
Table of Contents
Low Tax Rate
The most attractive factor of incorporating a business in Hong Kong is the low tax rate that the city has to offer. It has one of the lowest tax rates of all the developed economies in the world. With income tax between 2% to 17%, and the corporate gains tax capped at 16.5%, it offers some of the most lucrative tax rates you can find anywhere in the developed world. Furthermore, you are not charged any income tax for the money made outside the borders of Hong Kong.
Two-Tier Tax Structure
The Two-Tiered Tax Rates that apply to corporations are also an attractive aspect of opening a business in Hong Kong. From 2018/19 onwards, the tax rate was divided into two tiers, applicable to corporations. For profits below $2,000,000, companies will be charged a corporate tax of 8.25%, while on profits above $2,000,000, the applicable tax rate will increase to 16.5%. For unincorporated businesses, the applicable tax rate for profits below $2,000,000 is 7.5% and for profits above $2,000,000, it is 15%.
This tax structure is something that not only encourages businesses but also helps you make more profits and increase overall revenue.
No tax on capital gains
There is no tax on capital gains in Hong Kong. Yes, the rate on capital gains is 0%. In other words, you can take all your earnings with you without having to worry about any taxes. Furthermore, you are also exempt from a number of other taxes, including dividends and interest. Furthermore, Americans, or foreigners in general, do not have to pay any net-worth or public benefit taxes.
No Sales Tax
If you are living in Hong Kong, you can spend as much as you want on shopping and eating in your favorite restaurants without having to worry about any taxes. The government does not levy any sales tax or any value-added tax, which again is something that is not common in developed economies.
All these factors show that Hong Kong is the ideal place for investors looking to safeguard their money and avoid having to pay hefty amounts in both direct and indirect taxes.