Software development refers to the process of building a software system or software part of a system according to user requirements. And if you are engaged in this industry, registered Hong Kong company in this industry generally has two roles.
According to the different roles of Hong Kong companies, the information provided by Hong Kong companies in the audit will also be different.
Since Hong Kong profits tax is a territorial tax, if the company's profits do not come from Hong Kong (do not occupy Hong Kong resources), the relevant profits can not be subject to profits tax in Hong Kong. However, due to the different roles of Hong Kong companies, the judgment of whether the profits come from Hong Kong will be very different, which requires special attention.
The difference can be made according to the development project. If part of the project in the current year is related to Hong Kong, the profits generated by the project will be subject to profits tax in Hong Kong. The remaining part of the project has nothing to do with Hong Kong, and the profits from this part can not be subject to profits tax in Hong Kong.(Reason: In this mode, the revenue and cost of Hong Kong companies can be clearly matched, and the onshore profit and offshore profit can be clearly distinguished)2.If the Hong Kong company is a software distribution platform:
If issued and promoted in Hong Kong, all profits of the company in the current year shall be deemed to have occupied Hong Kong resources and shall be subject to profits tax in Hong Kong. This is because the revenue of the Hong Kong company comes from the sharing of the platform, which cannot accurately match the costs and promotion expenses related to Hong Kong. Therefore, as long as the Hong Kong company is related to Hong Kong this year, all the profits must be paid in Hong Kong profits tax. However, if the annual revenue, costs and expenses of the Hong Kong company have nothing to do with Hong Kong, all the profits can be regarded as overseas profits and may not be subject to profits tax in Hong Kong.(Reason: Under this model, the revenue of Hong Kong companies cannot be clearly matched with the costs and promotion fees, which means that the profits of Hong Kong companies cannot be clearly differentiated between onshore profits and offshore profits. So these companies have to either make all of their profits offshore for the year or make all of their profits onshore for the year. Offshore and onshore distinctions cannot be made.)
To sum up, if you are engaged in the software development industry, if you have overseas companies, it is recommended to follow the process described above and choose your own type according to the business model of overseas companies.
keywords Software development industry audit