Claiming “Offshore Tax Credit” for a Hong Kong company

A Hong Kong company that does not derive income in Hong Kong is not required to pay tax to the Hong Kong government, even if it has a profit.  To claim the offshore tax credit:

  1. Make sure your company does not have any clients in Hong Kong , and does not derive any income here
  2. *Very Important* Inform your accountant your intention to claim the foreign tax credit.
  3. Gather proof that no income is derived in Hong Kong. We have heard that it is harder for an Internet company to prove.
  4. Upon receiving the offshore tax credit application, the tax department may issue the company a letter with questions. You will need to answer the questions.

Note that the offshore tax credit is granted on a case by case basis. There is no model answer for the tax department’s questions. If the government grants the credit, the company does not have to pay tax to the government. But still, it will need to do the accounting, audit, and tax filing every year. If the government does not grant the credit, then the company will have to pay tax.

More information can be found here:

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