Hong Kong, Principles of Taxation

The main principle of taxation in Hong Kong is that taxes are levied on a territorial basis, meaning that a HK company is not subject to HK taxes if its operations are not carried out in HK. When determining whether a HK company's operations are carried out in HK, all the company's operations (including customers' enquiries about product prices, place of orders from the customer, place of a purchase order, completion of sale and purchase, etc.) will be considered from the point which processes are carried out in and outside HK. The location of bank accounts is insignificant for this matter. If business income is based on earning commission by securing buyers for products or by securing suppliers of products required by customers, then the source of the income is that place where the activities of the commission agent are performed. Therefore, income source is Hong Kong if such activities are performed through an office in Hong Kong.