Home / Profits tax and related tax filings / Tax arrangement
PE risk
Permanent establishment risk
A Hong Kong company seconding staff to the Mainland constitutes a PE there once the presence exceeds 183 days in aggregate in any 12-month period (Article 5 of the Arrangement), with the attributable profits taxed in the Mainland; a construction site or installation project lasting more than 6 months is also a PE. Business profits unconnected to a PE are not taxed in the Mainland.
Rate comparison for the common items
| Item | Arrangement rate | Domestic rate | Main conditions |
|---|---|---|---|
| Dividends | 5% | 10% | Beneficial owner with a direct holding of at least 25% |
| Dividends (other cases) | 10% | 10% | — |
| Interest | 7% | 10% | Certificate of resident status + beneficial owner |
| Royalties | 7% | 10% | Certificate of resident status + beneficial owner |
| Business profits | Not taxable | — | No permanent establishment in the Mainland |
Case-specific decisions differ — book a consultation with our advisers.
The content of this page is general professional information and does not constitute tax, legal or investment advice. For specific cases, please consult a Hong Kong practising accountant or tax adviser, or refer to official publications of the IRD / SFC / HKMA / CR.