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Hong Kong: Corporate Investment

Incentive Schemes

Income from the international operations of shipping companies is exempt from tax unless the ships are operating in Hong Kong waters or proximate to the same in which case only that proportion of income earned in Hong Kong is subject to local tax of 16.5%. Shipping profits meeting the conditions of the double taxation agreement with the USA are exempt from profits tax in Hong Kong.

Irrespective of whether or not the company is managed and controlled from Hong Kong assessable profits are the proportion of income arising within Hong Kong (from the uplift of passengers and freight locally) to the proportion of worldwide income. Under a number of international aircraft double taxation agreements the government has agreed to include income arising abroad for taxation in Hong Kong where that income is exempted abroad under the agreement. Likewise profits meeting the conditions of the double taxation agreements are exempt from profits tax locally. The rate is 16.5% of assessable profits.

As from the 2010/2011 tax year, 100% depreciation allowances are on offer for capital expenditure on environment-friendly vehicles, which are defined as hybrid electric vehicles and electric vehicles. Leasing expenditure is not included.

Where an eligible vehicle is used both for business and private purposes, the deduction is apportioned accordingly.

There is also a 100% deduction for the purchase of environment-friendly machinery and equipment.



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