Another tax saving tip for your business!
We all know one thing for certain in Hong Kong – rent is expensive. Really really expensive. For many, Hong Kong rent can eat up most of their monthly paycheck. Luckily, Hong Kong has a policy providing relief for entrepreneurs here.
In Hong Kong, the directors of a company can use their rent expense to deduct from their taxable business income. What does this all mean? Business taxes, called Profits Tax in Hong Kong, take a portion of yearly profits. Your profit is calculated by taking revenue for the year and subtracting expenses the company incurred. Hong Kong very uniquely allows the directors’ rent to be deducted as a business expense, thus making the profit the government can tax smaller. Since rent is so high, this allowance can amount to thousands of dollars in tax savings.
So, why does the government have this rule? Hong Kong policymakers reason that in order to run a business in Hong Kong, you are going to have to live and pay rent somewhere to run that business. Sadly, few other countries follow this reasoning.
Hopefully, paying rent in Hong Kong is now a little less painful! At Centre O, we can arrange the yearly accounting & auditing for you. Contact us at firstname.lastname@example.org for more details.
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