The main legislation is the Law on Inland Revenue (taxation). It provides for the use of four types of income taxes: - income tax - payroll tax - property tax - taxes on interest income. The greatest value in international tax planning is a tax on profits, which will be discussed in this article in more detail. In Hong Kong there are no taxes on capital gains, dividends, interest, royalties received from abroad or going abroad. Tax rate on profits for companies that operate in Hong Kong, is 17.5%. For exemption from income tax, in practice, a company must meet the following criteria: - the company has no fixed place of business in Hong Kong, for example, office, shop, jobs - traded goods should not be done in Hong Kong - there are no staff working in Hong Kong - contracts entered into and performed outside Hong Kong, - None located on the territory of Hong Kong suppliers and contractors, - transport of goods between ports should be located outside Hong Kong. Foreign cash commissions and fees received from licenses pertaining to music, movies, income from patents, publishing, rights to mining, consultancy services, income from rent is not taxable in Hong Kong. Such income can be transferred to a deposit account in Hong Kong or place in another country without imposing any tax. Thus, Hong Kong offers tax regime, which can compete with offshore zones, and provides benefits to international trade and finance. You can take advantage of the avoidance of double taxation for those countries with which Hong Kong has signed the relevant agreements. At the moment Hong Kong has signed an agreement on avoidance of double taxation with Belgium and intends to enter into a network of such treaties. Thus, the main characteristics of the tax regime in Hong Kong the following: - Territorial tax system. Not to be taxed on income from sources outside Hong Kong; - Recognition as a respectable financial center of most countries - lack of any major taxes except the income tax in the amount of 17,5%, levied only on income earned in Hong Kong. - Personal income tax on individuals does not exceed 16% - Interest income on deposit, opened in Hong Kong is not taxable in Hong Kong - No tax on income from capital or capital gains - No tax on dividends received from abroad - No tax on dividends sent abroad. Hong Kong companies - this is a serious financial instrument that requires, in contrast to offshore, the additional costs of providing financial reporting. The annual report shall be submitted within 42 days after the end of the year from the date of incorporation. All Hong Kong company must keep proper books and records in accordance with the Companies Act and the Act as well as internal revenue, regardless of whether their business is conducted in Hong Kong or elsewhere. Also, companies must annually take the profit and loss account and pass a mandatory audit. Typically, for the real owners of these procedures are carried out secretarial company. In most cases, subject to the ignorance of the Hong Kong and receiving income from sources outside Hong Kong, the company is limited to filing a simple report - the lack of activity in Hong Kong. Therefore, no information from the owners of companies on their activities do not actually requested. However, tax authorities may make a request to provide full financial statements with proof of primary documents. To prepare a full accounting and auditing passage from the owner of a Hong Kong company is required to provide the auditors on the bank account statements, invoices and contracts for each transaction. Differences in Hong Kong from offshore zones. Despite the possibility of taxation, similar to the capabilities of offshore jurisdictions, offshore Hong Kong is not in the classic sense of the word. Exemption from tax in Hong Kong is not automatic. Must submit a report to the Inland Revenue Department about the dark activity. And in some cases, the Department may request the relevant documents confirming that the company had no income from sources within Hong Kong and has not been driven from the territory of Hong Kong. Another difference in the Hong Kong Companies from the classic offshore is their transparency. Information about the shareholders and directors of the Hong Kong companies is open and is in the public domain. All this makes Hong Kong companies with prestigious corporate instruments, recognized throughout the world. Companies incorporated in Hong Kong and legally conducting the activity, is much easier to prove the lawful origin of their funds when making investments in developed countries, which is a major advantage over off-shore companies. Scheme of the Hong Kong companies. 1. Company of Hong Kong as an intermediary in international trade. Company in Hong Kong - an ideal intermediary for trade with China and Asia, but can be widely used in trading activities worldwide. General mechanism of a trading company in Hong Kong: - The company in Hong Kong is a link, parties to a contract as a supplier and a buyer of goods - Transportation of goods is made directly from the supplier to the ultimate purchaser ( "direct delivery") - The company in Hong Kong gets through and pays the cost of the goods to the supplier, as well as an invoice to the buyer of the goods, adding to the price of the size of its own profits. - Tax-free profits accumulated in the accounts of a Hong Kong company. 2. Company in Hong Kong as a service provider. In this case, payment for services is transferred to the account of a Hong Kong company. However, the company, based on the territorial principle of taxation, there is no obligation to pay taxes on income.