PolyU Online Workshop - Taxation in Mainland China and HK

The online workshop named “Taxation in Mainland China and HK” organized by KTEO, PolyU on 30^th Mar 2023. Mr. Maurice Saeung (Head of Compliance of a Hong Kong listed company) was the guest speaker and he discussed the ins and outs of taxation in Mainland China and Hong Kong. The workshop aimed to introduce tax-efficient corporate structures for HK/China cross-border business, tax incentives and practical issues, as well as tax issues related to stock awards and share options. 

Firstly, Mr. Maurice Saeung briefed the important of taxation to entrepreneur including tax expense reduction, reducing tax liability, avoiding incorrect tax filing and corporate image. Then he introduced some features of tax system in Hong Kong.

And then he raised an example that HK resident owned design studio providing product design services. The company income is design service fee and expenditures are salaries and software license fee to US. He compared the tax burden between Hong Kong and Shenzhen that HK is higher return on capital.

The second case is related to offshore profit that is not taxable in Hong Kong but China corporate income tax is imposed on worldwide profit. And the third case is business expansion and the additional funding from owner lending or HK angel investor.

The fourth case is owner received an offer from investor for purchase of 30% shareholding and purchase price at 20x PE. 

The last case is owner considering a share option scheme to incentivize his senior staff. The tax implications to employer and employee were discussed.

Finally, Mr. Maurice Saeung discussed the corporate structure for HK and China business in both service and production.

Lastly, he briefed the foreign source income exemption (FSIE) regime that effective from 1 Jan 2023, certain foreign source income if received in HK are deemed to be taxable income subject to profits tax, unless the conditions for tax exemption apply.

Reference:

KTEO - https://www.polyu.edu.hk/kteo/

20230323: PolyU Startup’s Guide: Setting up a company in Mainland China - https://qualityalchemist.blogspot.com/2023/03/polyu-startups-guide-setting-up-company.html