The Tax Law in Hong Kong states that profits arising or derived outside Hong Kong are not subject to Hong Kong tax. However, it is the responsibility of the taxpayer to provide sufficient evidence and documentations to satisfy the Tax Department for their offshore claim, a case of “Guilty until proven Innocent”
So how to prove the profits came from outside of Hong Kong?
In order to claim that the Company’s business activities were not carried on in Hong Kong, the Company must provide evidence to the Tax Department to support their offshore claim.
Note: This simple concept can however produce cases which are not clear cut and hence difficult to ascertain the final outcome of the offshore claim.