Maximize Profits with Hong Kong’s Offshore Tax Benefits: How We Can Help You Set Up a Hong Kong Company earning profits not subject to tax

Are you an international business looking to expand into Hong Kong? Would you like to benefit from one of the world’s most attractive tax regimes while maintaining your global operations? As a leading CPA and tax advisory firm in Hong Kong and worldwide, PKF Hong Kong is widely recognized as one of the most trusted tax advisors in the city. Our team of experts deeply understands the nuances of Hong Kong’s territorial source principle of taxation and has a proven track record in assisting clients in establishing Hong Kong companies that operate efficiently and tax-effectively.

 

Why Hong Kong? A Gateway to Global Business with Favorable Tax Treatment

Hong Kong’s tax system is renowned worldwide for its simplicity, transparency and competitiveness. The key advantage lies in its offshore tax exemption, which allows profits earned outside Hong Kong to be fully exempt from profits tax. Under the right conditions, this means your Hong Kong company can generate income without incurring local profits tax — helping you retain more of your earnings to fuel your growth.

 

How Does the Offshore Tax Exemption Work?

Hong Kong adopts a territorial principle of taxation — only profits arising from or derived within Hong Kong are subject to profits tax, currently charged at 16.5%, with a reduced rate of 8.25% on the first HK$2 million of assessable profits if specific conditions are satisfied. Profits generated outside Hong Kong are not taxable, provided you can demonstrate that your main business activities occurred offshore.

Achieving this exemption involves careful operational structuring and thorough documentation — an area where PKF Hong Kong's renowned tax advisory team excels. We are widely regarded as one of the leading tax advisory firms in Hong Kong, with extensive experience helping clients craft compliant and effective offshore claims.

 

Structuring Your Hong Kong Company for Offshore Benefits

Whether engaged in trading (buying and selling goods or commodities via traditional or e-commerce models) or offering services (such as business process outsourcing, management, consultancy, design, or marketing), PKF Hong Kong can guide you in designing and running a Hong Kong company optimized for offshore tax benefits.

 

Trading Activities:

For trading companies, key activities, such as contract negotiations, order processing, logistics and management, should generally be conducted outside Hong Kong. Importantly, no stock or physical goods should be kept in Hong Kong, nor should goods physically enter Hong Kong during transactions. When core functions are performed offshore, your company may qualify for the full offshore profits exemption.

 

Service Activities:

For service providers, the emphasis should be on delivering services outside Hong Kong. Having staff or contractors based overseas, coupled with strategic contracts negotiated offshore, generally support a robust offshore claim that the income is sourced outside Hong Kong.

 

Supporting Evidence & Proper Documentation

The Hong Kong Inland Revenue Department (“IRD”) bases its offshore exemption decisions on the substance of your operations, not merely the place of company registration or where the bank accounts are opened. PKF Hong Kong’s highly experienced tax team will assist you in gathering and preparing all essential documentation for submission to the IRD. Providing comprehensive, well-organized evidence will enhance your chances of successfully claiming the offshore exemption.

 

Our Services at a Glance

• Business structure planning: Tailoring your Hong Kong setup to optimize offshore operation and tax benefits.
• Operational review: Analyzing your current or proposed operations to identify offshore claim potential.
• Documentation & evidence preparation: Assisting in compiling the supporting documents needed to substantiate your claim.
• Tax filing & IRD liaison: Managing your Profits Tax Return filings and communications with the IRD. In case of IRD inquiries, we guide you on how to respond effectively, protecting your offshore status.
• Restructuring & compliance: Advising on operational restructuring to ensure ongoing compliance and maximum tax benefits.

 

Who we are

As a distinguished member of the PKF International network — an esteemed global organization with a presence in 150 countries across five continents — PKF Hong Kong is uniquely positioned to deliver expert services with a global perspective. Established in 1968, our firm has built a reputation as one of the leading and most reputable accounting and tax advisory firms in Hong Kong, with more than a hundred professionals working from our offices in Hong Kong and Shenzhen.

Being part of PKF International, we leverage worldwide expertise and extensive resources to provide tailored solutions that meet the needs of our international clients. We are committed to delivering high-quality audit, accounting, and tax advisory services that uphold the highest standards — helping your business stay aligned with evolving regulations and market conditions worldwide.

 

Why Choose Us?

With our in-depth understanding of Hong Kong’s tax laws, particularly the offshore exemption and territorial source principle, and our strong global network of expertise, PKF Hong Kong is well-equipped to assist foreign investors in establishing and operating Hong Kong companies for trading or service activities. Our mission is to help you structure your business in a way that maximizes your tax benefits legally, efficiently and with confidence. As one of the leading and most trusted tax advisors in Hong Kong, we pride ourselves on providing practical, high-quality solutions tailored to your needs.

 

Get in Touch

Ready to take your international business to the next level? Contact PKF Hong Kong today. Our team of experts is committed to delivering tailored, strategic guidance to help you establish a compliant, tax-efficient Hong Kong company that unlocks your full growth potential.

Let us help you navigate Hong Kong’s tax landscape with confidence — maximizing your profits while ensuring full compliance.