This post is also available in:
繁體中文 (Chinese (Traditional)) 简体中文 (Chinese (Simplified))
An Overview of the Withholding Tax Rules in Hong Kong
Manage all your withholding tax needs with 3E Accounting’s withholding tax services in Hong Kong. Withholding taxes are applicable to only non-resident individuals and businesses.
Hong Kong’s Tax System
When a business or individual makes payments to non-resident entities for services they receive in Hong Kong, the portion of payment withheld is called withholding tax. Hong Kong follows a territorial system. This means that taxes are levied on profits. These profits must come from either a trade, profession, or business that is done in the country. This system doesn’t separate between residents and non-residents.
How Withholding Tax Is Applied in Hong Kong
Non-resident entities will be charged with withholding tax. This will happen if they receive income that comes from a Hong Kong source. If you are a foreigner that stays or works for less than 180 days in the country, you are considered a non-resident.
Only some payments are subjected to withholding tax. These include:
- Royalties. A non-resident company would have to pay 16.5% in withholding taxes. Affiliate non-resident individuals would have to pay 15% while non-affiliates pay 4.5%.
- Fees paid to non-resident sportsmen or entertainers. They will have to pay a withholding tax rate amounting to 10%.
Royalty payments are payments received from using any of the following:
- Patents
- Sound and tape recordings
- Exhibition of films
- Trademarks
- Copyrighted material
- Related advertising material in the country
- Any knowledge that is used in relation to intellectual property. This is applicable in and out of the country.
Withholding taxes are not levied on interest or dividend. 3E Accounting’s Withholding Tax Services in Hong Kong can help you ascertain if you are liable for withholding taxes.
There are no withholding taxes levied on dividends and interest. All payments must be made to the Inland Revenue Authority Hong Kong. Hong Kong has double tax treaties with over 30 countries. You could be exempted from certain taxes if your country has a treaty with Hong Kong. The details and conditions of the treaty will specify your withholding tax requirements.
Do You Need Support With Your Taxes?
3E Accounting is here to help. With our Withholding Tax Services in Hong Kong, you have everything you need under one roof. Get your taxes sorted from start to finish by our very insightful and experienced professionals. For more information, contact our team today.
