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Tax queries letter – Tax exemption status

If you have a Hong Kong Limited company and your company did not commence business in Hong Kong, you do not need to pay tax in Hong Kong.

However, your company will have to file the first profits tax return as regular before applying for tax exemption status, i.e. 0% tax to be paid in Hong Kong.

Below please find example of an app development company about details of document to be submitted in order to fulfill the requirements of application for tax exemption status:

1. Business establishment

i.   Detailed information of the Company’s establishments in Hong Kong and overseas

1. Location of office

2. Size of office

3. Number of employees

i. Employees’ name

ii. Title

iii. Duties

iv. Remuneration package

4. If there is no overseas establishment,

i. Details of intermediary through which overseas were effected

ii. Intermediary general authorities

2. Operation to earn the income from sales of Apps

i. Detailed description of the operation of the company to generate income from sales of Apps

1. E.g. are the apps designed by the company?

2. E.g. are the apps tailor-made and sold to particular customers?

3. E.g. are the apps acquired from software design companies and resell to customers through platform such as Apple App Store?

ii. Provide a list for each app showing:

1. Name of app acquired/designed by the company

2. Amount of revenue generated during the years of assessment

iii. Select a representative transaction with the greatest amount of revenue that occurred during the year of assessment stated on the letter to show the flow of operation of the company to earn income from sales of apps from the beginning to final sale to customers.

3. Copies of relevant agreements and documents as supporting document

iv. Reasons for income earned is not relevant to Hong Kong Profits Tax

You will have to reply to Companies Registry within one month.

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