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If a Hong Kong company obtains a loan from a bank in Hong Kong, is it subject to Hong Kong income tax?

Released Date: Mar 30,2024 Article Source: HUANZE
 If a Hong Kong company obtains loans from banks in Hong Kong, does the operating income of the Hong Kong company meet the conditions of offshore profit? Do Hong Kong companies need to pay profits tax? This problem should be analyzed on a case-by-case basis.

       If a Hong Kong company obtains loans from banks in Hong Kong, does the operating income of the Hong Kong company meet the conditions of offshore profit? Do Hong Kong companies need to pay profits tax? This problem should be analyzed on a case-by-case basis.

      If the loan obtained by a Hong Kong company is used for the operation of its main business, such as the purchase of goods or the payment of relevant expenses required for operation, then the operating income of the Hong Kong company is related to the loan from Hong Kong, that is, the generation of profits occupies the resources of Hong Kong, and the source of profits should be Hong Kong, so it belongs to the onshore profit. If you do not meet the conditions for offshore profits, of course you need to pay profits tax in Hong Kong.
       If a Hong Kong company obtains a loan from a Hong Kong bank through internal guarantee and external loan, and then transfers the loan back to the parent company in mainland China for use, the interest on the loan repayment will also be transferred from the parent company in mainland China to the Hong Kong company, which will then make the payment.In this way, although a Hong Kong company has obtained a loan from a bank in Hong Kong, the loan is not used for its own business, so the profits generated by its own business have nothing to do with the loan and should meet the conditions of offshore profits, so it does not need to pay profits tax in Hong Kong.










 

Keywords: Hong Kong company

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