Trading hong kong

L

luxhydrus

Hello everyone, i would really appreciate answers to the following questions:

1- Hong kong has zero capital gains tax, does that mean day traders pay no tax. (equity, derivative, forex traders)

2- Hong kong has zero capital gains tax, but a non-zero corporate income tax.
Lets say there is a hong kong manufacturing corporation that has a little bit of extra money on hand, so they start trading the extra cash in stocks and futures, do they pay tax on the profits.
 
Quote from luxhydrus:

Hello everyone, i would really appreciate answers to the following questions:

1- Hong kong has zero capital gains tax, does that mean day traders pay no tax. (equity, derivative, forex traders)

2- Hong kong has zero capital gains tax, but a non-zero corporate income tax.
Lets say there is a hong kong manufacturing corporation that has a little bit of extra money on hand, so they start trading the extra cash in stocks and futures, do they pay tax on the profits.
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and if i move to hong kong, will i be able to trade tax-free?
 
Quote from luxhydrus:

and if i move to hong kong, will i be able to trade tax-free?
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You would have to renounce your Usa citizenship in order to lefgally get away from Usa taxes.
 
Quote from luxhydrus:

Hello everyone, i would really appreciate answers to the following questions:

1- Hong kong has zero capital gains tax, does that mean day traders pay no tax. (equity, derivative, forex traders)

2- Hong kong has zero capital gains tax, but a non-zero corporate income tax.
Lets say there is a hong kong manufacturing corporation that has a little bit of extra money on hand, so they start trading the extra cash in stocks and futures, do they pay tax on the profits.
More...

1. Not necessarily. If your day trading activity was deemed to be carrying on a profession, trade or business, then you would be subject to Profits Tax. (In practice, an individual trading a personal account of moderate size will not readily be picked up on the IRD's radar unless the profits are being re-invested in some other asset/business that is reportable)

2. Income derived from the non-principal activities of a business has still to be included in the gross income and accounts of the company. Profits from the purchase and sale of listed securities (in Hong Kong) would qualify for this description. Profits Tax isn't charged on the sale of capital assets (or dividend income), but it is charged on income from the sale of trading assets. Trading listed securities in the manner you describe is short-term in motivation, and I would expect that profits from this would considered income from trading assets.

With the usual disclaimer that I'm not an accountant or tax lawyer so consider it mere opinion.
 
Quote from dunleggin:

1. Not necessarily. If your day trading activity was deemed to be carrying on a profession, trade or business, then you would be subject to Profits Tax. (In practice, an individual trading a personal account of moderate size will not readily be picked up on the IRD's radar unless the profits are being re-invested in some other asset/business that is reportable)

### AFAIK no problem as an individual, but sometimes the IRD can be surprising.

2. Income derived from the non-principal activities of a business has still to be included in the gross income and accounts of the company. Profits from the purchase and sale of listed securities (in Hong Kong) would qualify for this description. Profits Tax isn't charged on the sale of capital assets (or dividend income), but it is charged on income from the sale of trading assets. Trading listed securities in the manner you describe is short-term in motivation, and I would expect that profits from this would considered income from trading assets.

### Expect to include profit on gains from the HK stock market in the company taxable income (not sure about derivatives)- no problem on cap gains earned on overseas market. Again AFAIK, I again received extra inquiries from the IRD - got off fine last year.

As I already mentionned in different threads, it's much less headache to trade through an offshore (BVI or Belize for instance) than through a HK company, even though you might use HK bank accounts and adress for this offshore company
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Quote from trader3cnd:

Better to go to a cheap place and pay capital gains tax than to an expensive place and pay no tax. No free lunch.
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This actually depends on the size of the capital gains and tax rates - as well as one's taste for cheap countries.

Also there are a bunch of cheap places (developping countries) where there is no need to pay taxes on cap gains, not just HK.
 
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