China Taxation Vs Hong Kong Taxation for Foreign Investors

INCORPORATION

2020-10-28

Centre O has written a blog highlighted China Taxation System before. China and Hong Kong taxation are two completely different system. In order to have better understanding on what taxes are you needing to pay within China, we are going to illustrate the differences between the China and Hong Kong. 

Value Added

Contrary to Hong Kong, VAT is applied in China for any sales and provision of goods and services, sales of intangible assets or immovable properties,

 

Corporate Income

In Hong Kong, it’s commonly named as Profit Tax, for 2019 to 2020, Profit Tax rate in Hong Kong is 8.25%, whereas, taxable income for companies in China are named as Corporate Income Tax.

 

Individual Income

This is named as Salary Tax in Hong Kong, which has to be reported to the Inland Revenue Department yearly by individuals including any of their incomes including, salaries, commissions, allowances. Hence, in China, it’s named as Individual Income Tax, which is commonly deducted from employee’s salary monthly.

 

Excise Tax

Excise tax does not applied in Hong Kong.  Consequently, any luxury goods, tobacco, alcohol and non-environmental friendly products commonly have exercise tax applied.

 

Stamp Duty

Without a doubt, both Hong Kong and China charges stamp duties for contracts and any taxable articles. like all other countries.

 

Real Estate

Ownership of properties is named as Real Estate Tax in China, while we address it as Rates in Hong Kong.

 

Land Use

Again, this is called Rates in Hong Kong, while in China, we address it as Urban and Township Land Use Tax.

 

Imported Goods

On the whole, other than tobacco and alcohol, there is no import tax applied when importing goods into Hong Kong.

Unlike China, there are tariff applied for all imported goods.

 

Deed

Overall, for both Hong Kong and China, where there is a transfer of ownership of properties or land use, there is a Deed Tax in China and a Stamp Duty paid for in Hong Kong.

 

Land tax

It should be noted that Land Appreciation Tax is applied in China only.

 

Supplementary Tax

Urban Maintenance and Construction Tax is only applied in China.

 

To sum up, Hong Kong taxation is much more simple than China taxation system.


For further information, please contact us.

You may want to read: CHINA TAXATION SYSTEM HIGHLIGHT FOR INVESTORS FROM OVERSEAS

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