If an offshore company is operating in Hong Kong and earns profits, as long as the profits originate in Hong Kong, it must also pay profits tax. Offshore companies also need to notify the Inland Revenue Department in writing within 4 months after the end of the tax year of the profit generated by their business, and they must also keep all relevant business accounting records for at least 7 years. Some overseas regions do not require offshore companies to prepare audited accounts every year. The Inland Revenue Department will accept completed tax returns and unaudited accounts to be submitted together.
Due to the difficulties of the Inland Revenue Department in levying taxes on offshore companies, the tax regulations require Hong Kong companies to file tax returns on behalf of the offshore company and deduct part of the tax in order to pay the tax amount required by the IRD to pay the offshore company in the following situations:
- 1. The amount paid to an offshore company due to the choice of a movie or TV show to be shown in Hong Kong
- 2. Amount paid to offshore companies for the exercise of relevant patents, designs, trademarks, copyrights, etc. in Hong Kong
- The Hong Kong company represents the offshore company to sell the goods by way of consignment and receives the total sale amount
The above information is for reference only. If in doubt, we welcome your tax inquiries