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Hong Kong residents withhold tax on behalf of non-residents

Because it is not easy for the Inland Revenue Department to levy taxes on non-residents, the Inland Revenue Department can levy taxes and collect taxes from their resident agents or local payment companies. Therefore, the resident agent or the local payment company must deduct and save the amount sufficient to pay the tax from the amount paid to the non-resident or non-local company in certain circumstances until the tax bill issued by the Inland Revenue Department is received. These situations are as follows:

• Patent fees or royalties

Residents or local payment companies must calculate the tax payable from 30% of the fees and deposit the tax on behalf of non-residents or non-local companies.

• Receiving the sales amount of goods sold on behalf of non-residents or non-local companies

The local agent is required to submit a report of the total sales revenue to the tax bureau every quarter, and pay 1% of the total sales revenue of the tax bureau or the commissioner agrees to a lesser amount

• Payments to entertainers or athletes

Residents or local payment companies must calculate and deposit the tax payable from two-thirds of the payment received. Regarding the second and third points above, if the assessable profit of a non-resident or non-local company cannot be easily determined, the Inland Revenue Department will calculate it at a fair percentage of his turnover.

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

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