Claiming Offshore Profits

A Hong Kong company could claim Hong Kong profits when delivering its first audit, 18 months maximum after the company incorporation. This is the approach for most SME’s when the effective place of management is located outside of Hong Kong.

Its also possible to request for a pre-ruling, when the expected profits will be important and when a component of the business / financial flow might create an issue (i.e. when a payee or payor is located in the city).

The pre-ruling arrangement is considered as demanding in term of resources and costs but for an active company this remain a good option.

To ease the process of securing an off shore status, the company will have, through Accoplus as its Hong Kong Tax Representative, to evidence and reply to In land Revenue Department about:

How the clients were contacted, keeping emails, minutes of meetings, phone bills, foreign expenses (i.e. restaurants, transportations) occurred
during and for the commercial activities.

  1. How the suppliers were contacted and how the prices were negotiated, keeping travels records and the exchanges trail.
  2. Record how and by whom the services were rendered, with a detailed description of such services supporting the demonstration of a substance outside of HongKong.