Forming an offshore company in hong kong for entrepreneurs although hong kong does not have any specific law that governs offshore company formation it is one of the most popular jurisdictions for setting up an offshore company owing to its low tax regime absence of foreign exchange controls political and economic stability ease of offshore company setup etc setting up an offshore . Hong kong highlights 2018 withholding tax dividends there is no withholding tax on dividend distributions from a hong kong entity interest there is no withholding tax on interest payments from a hong kong entity royalties royalty payments made to a nonresident are deemed to be taxable in hong kong if made for the use. If a hong kong companys business activities take place entirely outside of hong kong it qualifies for an offshore profits tax exemption granted by the hong kong tax authority which results in the companys profits being tax free in hong kong. Offshore income earned outside of hong kong is not subject to hk tax offshore tax exemption claim can be lodged when filing the first year profits tax return ird provides certain guiding principles on determining whether the source of profits are hong kong based or not. Hong kong has a flat corporate tax rate of 165 on assessable profitsa concessionary tax rate at 50 of the normal profits tax rate will be applied to trading profits and interest income received or derived from qualifying debt instruments issued in hong kong and to offshore business of professional reinsurance companies
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