Limited company-increased tax deduction by salary

Limited company-increased tax deduction by salary

According to the Hong Kong Tax Regulations, all management expenses and expenses incurred by taxpayers in order to generate taxable profits during any period of their business operations can be deducted. In many cases, taxpayers will set up a limited company and then hire employees to help run the company and take care of the company’s business. The company can hire directors, directors’ spouses, directors’ children, directors’ relatives, a large number of part-time employees or a large number of short-term employees to take care of the company’s business, help the company run, and then pay them a large salary, but of course, the amount of salary paid must be reasonable. The company will therefore increase the deduction of total expenses.

In this regard, taxpayers should note that the tax regulations provide otherwise that sole proprietors or partnership business partners are not eligible for deductions for the salaries paid by their spouses.

The above information is for reference only. If in doubt, we welcome your tax inquiries

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