TAX PLANNING


Tax Service

What is Tax Planning?


Tax planning is much more than coming up with an estimation of your year ended tax liability and how much you should pay your taxes. Tax planning is at a higher level of reviewing the entirety of you and your company financial situation and ensuring that all facets work cohesively to ensure you pay the least amount of taxes possible.

Tax planning is a legitimate way to reduce your tax liabilities in any given financial year. It helps you utilize the tax exemptions, deductions, and benefits offered by the authorities in the best possible way to minimize your liability.


Why I need Tax Planning?


Tax planning is a focal part of financial planning. It ensures savings on taxes while simultaneously conforming to the legal obligations and requirements. The primary concept of tax planning is to save money and mitigate one’s tax burden.


Tax evasion is an illegal method of obtaining a tax benefit. Tax planning is an attempt to obtain a tax benefit by legal means. Through efficient tax planning, a company/a taxpayer can enjoy maximum tax saving.


SOME TAX PLANNING TIPS:

  • Personal Expenses Paid by the Company - Personal expenses paid by the company are the most common way of minimizing tax liability adopted by small-medium companies. In order for such expenses to be qualified for deduction, company should prove that such expenses are not personal expenses defined by Inland Revenue Ordinances. In this sense, company should enter into an employment contract between the company and the director specifying clearly that the expenses should be borne by the company.

  • Quarter Rent Payment - Quarter rent payment of director/employee can be reimbursed by employer. The employee is only subject to tax on maximum 10% of his/her net assessable income in respect of the provision of quarters on his/her salaries tax. And the employer can deduct full amount as an expense towards calculating the net profit.

  • Deductible Expenses and Depreciation - All outgoings and expenses, other than expenses of a domestic, private or capital nature, wholly, exclusively and necessarily incurred in the production of assessable income, are allowed to be deducted from assessable income. Taxpayer can request deduction of such outgoings and expenses in the tax return, but proper records and receipt must be kept.

  • 60-Day Visit Rule - In general, if a person visits Hong Kong for not more than 60 days during the year of assessment, he will be exempt from salaries tax. In counting the number of days of visit, all days in HK are counted regardless of business related or not. Part of a day is counted as one whole day.


Prism provides the following services to assist you to achieve this purpose:

  • A consultation meeting to extensively review your current tax position
  • Provide follow-up proposals and action plans to you in order to maximize your tax exemptions, deductions, and benefits offered by the authorities.
  • Ensure cost efficiency is in place
  • We will guide you on how to maximize the usage of tax exemptions, deductions, and benefits offered by the authorities to minimize your tax liabilities
  • Home office claim
  • Accommodation claim
  • Director Fee/Salary
  • Dividend declaration
  • MPF
  • Personal insurance claim

    • When the company is commenced business outside Hong Kong, there will be no tax, despite the bank accounts are holding in Hong Kong. Income raised in or derived from outsides of Hong Kong is not subject to Hong Kong Corporate Tax. In other words, if you are operating a Hong Kong company and the bank facilities are held in Hong Kong, but you are residing in overseas and income is derived from your overseas clients, your Hong Kong company is not subject to Hong Kong corporate tax. Only income which raised in or derived from Hong Kong is subject to corporate tax in Hong Kong.


    • Review the company operation to fit offshore claim requirement

    • Provide suggestion and action plan to meet the offshore claim requirement

    • Assist in the submission of an application for an offshore claim to waive all or partial tax liabilities

    • Liaison with IRD for the offshore claim

  • Hong Kong is a business-friendly city that has entered into Comprehensive Double Taxation Agreements (DTAs) with over 40 jurisdictions in double taxation issues. These income tax treaties save business owners from paying double taxes when operating their business in Hong Kong and their native country.

  • Assist in getting a Tax Residence Certificate which helps the company lower or avoid withholding taxes on dividends, interest, royalties, and licenses fee or potentially avoid capital gain tax in the jurisdiction where the payments are made.

    • Don’t hesitate to call us now and talk to our consultant!


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