Hong Kong company with an offshore profits claim
Hong Kong taxes only profits arising in or derived from Hong Kong, so a Hong Kong company whose profit-generating operations happen entirely outside Hong Kong can claim its profits are offshore and not taxable. The claim is examined closely by the Inland Revenue Department, and since 2023 the foreign-sourced income exemption (FSIE) regime taxes certain passive foreign income received in Hong Kong by group companies unless substance or participation conditions are met. It suits genuine offshore trading, but it is a common trap for UK residents.
- Traders and service businesses that genuinely operate outside Hong Kong (for example sourcing in mainland China and selling to Europe) and can prove where the work is done.
- Founders who live in Asia and use Hong Kong for banking, contracts and reputation.
Reviewed 2026-09-29. Research, not advice.