Offshore claim is not automatic, it needs to be applied through application to IRD. Usually, offshore-sourced income must at least fulfill all of the following conditions:
- Proof of profits not derived from Hong Kong with sufficient proofs of transactions which give rise to such profits are provided.
- No business activities which produced the relevant profits held in Hong Kong
- The director(s) stay less than 60 days in Hong Kong in a tax year.
The taxpayer should prepare copies of EVERYTHING relate to the business operation for the test. Seriously, the IRD wants every single invoice, receipt and every bank statement, etc. Moreover, IRD reasonably questions not only the company’s books but also every document.
The complete transaction records to illustrate the fact that all activities were taken place outside Hong Kong are listed as follows:
-Organization chart showing location of offshore operation
-Emails, faxes & itemized telephone bills showing to which numbers calls are made to clients / suppliers
-Memos of meetings with customers and suppliers
-Travel receipts & passport copies showing locations and dates of visit
-Purchase orders, sales orders and shipping documents
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