A Hong Kong company is only required to pay profits tax, which is calculated on the basis of 16.5% (2007/08:17.5%) of its profits. If the company does not make any profit, it does not need to pay profits tax.

It is customary to use either March 31 or December 31 of each year as the tax base period. The maximum base period for the first year of a Hong Kong company is 18 months.

There is no tariff on general import/export goods, except for tobacco, alcohol and petroleum. However, imports and exports must be declared at customs.

There are three types of taxes in Hong Kong: Profits Tax, Salaries Tax and Property Tax. Profits tax is 16.5% (2007/08: 17.5%) of a company's assessable profits; salaries tax is calculated on the basis of salary income at progressive rates, subject to a ceiling of 15% (2007/08: 16%) of total salary income; and property tax is calculated on the basis of the rental income of the property owned, less a standard deduction of 20% for repair and expenditure, and 15% (2007/08: 16%) of total salary income. Property Tax is calculated on the basis of rental income from property ownership after deducting the standard allowance of 20% for repairs and expenses at 15% (2007/08: 16%).

The Base Period is one of the following periods:
March 31 or December 31 is the more common year-end.
Other months may be designated as year-end

Deduction is allowed for donations to recognized charitable organizations. However, the total amount of donation must not be less than $100 and not exceed 35% (2007/08: 25%) of assessable profits.

Losses incurred in a taxable year can be carried forward and used to offset the company's profits in subsequent years.

Profits tax is levied on the actual profits for the year of assessment. As the profits for a particular year can only be ascertained after the end of that year, the Inland Revenue Department (IRD) will levy provisional tax before the end of that year. In the following year, when the profits for the year have been assessed, the amount of provisional tax paid can be used to pay the profits tax payable for that year.

If a company's profits are not derived from Hong Kong, and the company has not yet set up an office in Hong Kong or employed Hong Kong employees, the profits earned will be exempted from profits tax.

Required. Since a company is formed to make a profit, even if a Hong Kong company can only fulfill the obligation to receive and pay others, it is likewise regarded as a business of agency services, the income of which is the pecuniary transactions such as receipts and payments brought about by others.

No. According to the laws of Hong Kong, all Hong Kong companies are obliged to report their financial position to the Inland Revenue Department (IRD), irrespective of whether their business is conducted in Hong Kong or not. If the company has no source of income in Hong Kong, it can apply for tax exemption from the IRD.