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Hong Kong has a tax-friendly environment combining a territorial (or "source") system of direct taxes with no capital gains tax, capital transfer tax, inheritance tax or VAT/GST. Direct income taxes in Hong Kong can be divided into profits tax, salaries tax and property tax. The tax year runs from 1 April to 31 March of the following year.
Hong Kong has negotiated a tax treaty network with 45 jurisdictions, creating more international tax planning opportunities for cross-border investments. Its tax treaties contributes to Hong Kong being one of the preferred Asian gateways for foreign investors to enter Mainland China and for Chinese enterprises to access the global market.
Under the Hong Kong territorial tax system, persons or companies carrying out any trade, profession or business in Hong Kong are taxable on all profits arising in or derived from Hong Kong from such trade, profession or business. Consequently, income which does not have a Hong Kong source is not subject to profits tax.