Competitive Tax Regime

Low and simple tax Regime

Hong Kong upholds a simple tax system. Its low, predictable and one-for- all tax regime provides certainty for commercial undertakings and makes conditional concessions and rebates unnecessary. Hong Kong has no other tax streams. Most government administration fees for commercial operations are charged on a cost- recovery basis. Hong Kong’s independent tax system and its low tax policy are enshrined in the Basic Law. Companies are subject to profits tax of no more than 16.5%, while salaries tax on individuals does not exceed 15%.

Hong Kong does not levy global tax. For shipping, profits derived from international shipping operations are not subject to profits tax in Hong Kong.

Shipping incentives

Hong Kong practises a shipping incentives tax regime to facilitate shipping activities. Income from international carriage of goods and towage is exempt from profits tax for ships registered in Hong Kong. Charter hire income is also exempt from profits tax for international operations, regardless of the nationality of the ships concerned.

Double taxation relief

Due to the international nature of shipping operations, shipping operators are more susceptible to double taxation than other taxpayers. It is therefore the Hong Kong Special Administrative Region Government's (HKSARG) objective to make arrangements with its trading partners for the avoidance of double taxation on income derived from international shipping operation. Such arrangements reduce the overall tax burden of ship operators of Hong Kong and the trading partners, thereby improving their international competitiveness. This will also help enhance Hong Kong's position as an international maritime centre.

Hong Kong has concluded double taxation relief arrangements covering shipping income with 47 tax administrations.

Double taxation relief arrangements may take one of the following forms:

Comprehensive DTA (CDTA)A bilateral agreement/arrangement that provides relief from double tax to all types of income including shipping income.

CDTA CONCLUDED

Africa

South Africa

South Africa

America

Canada

Canada

Mexico

Mexico

Asia

Brunei

Brunei

India

India

Indonesia

Indonesia

Japan

Japan

Korea

Korea

Kuwait

Kuwait

Mainland China

Mainland China

Malaysia

Malaysia

Pakistan

Pakistan

Qatar

Qatar

Saudi Arabia

Saudi Arabia

Thailand

Thailand

United Arab Emirates

United Arab Emirates

Vietnam

Vietnam

Europe

Austria

Austria

Belarus

Belarus

Belgium

Belgium

Czech

Czech

Finland

Finland

France

France

Guernsey

Guernsey

Hungary

Hungary

Ireland

Ireland

Italy

Italy

Jersey

Jersey

Latvia

Latvia

Liechtenstein

Liechtenstein

Luxembourg

Luxembourg

Malta

Malta

Netherlands

Netherlands

Portugal

Portugal

Romania

Romania

Russia

Russia

Spain

Spain

Switzerland

Switzerland

United Kingdom

United Kingdom

Oceanic and Pacific Islands

New Zealand

New Zealand

Agreement for the avoidance of double taxation (DTA) covering shipping incomeA bilateral agreement to provide for profits derived from the operation of ships in international traffic by a shipping enterprise of one contracting party to be exempted from taxes in the other contracting party on a reciprocal basis. In other words, it is an agreement to relieve shipowners of the burden of double tax.

Shipping DTA Concluded

Denmark

Denmark

Germany

Germany

Netherlands

Netherlands

Norway

Norway

Singapore

Singapore

Sri Lanka

Sri Lanka

United Kingdom

United Kingdom

United States

United States

Reciprocal tax exemption (RTE)Section 23B of the Inland Revenue Ordinance provides for reciprocal tax exemption for shipping income, so that ship operators can benefit from the tax relief offered by places with similar reciprocal tax exemption legislation.

RTE CONCLUDED

Chile

Chile

Korea

Korea

New Zealand

New Zealand

More information on double taxation relief can be found at the website of Inland Revenue Department(Click here).