Will there be export tax rebates for Hong Kong exports? Will there be export tax rebates for Hong Kong exports? Zhihu

It is particularly noteworthy that Hong Kong adopts the principle of "neutral treatment" for re-export trade. When goods are transshipped through Hong Kong, as long as they do not enter the local consumer market, regardless of whether they undergo simple processing, they are exempted from all taxes and fees. This policy has made Hong Kong one of the largest re-export trade centers in the world.1. The re-export trade volume will reach HK$5.6 trillion in 2022.

Comparison with the Mainland’s export tax rebate

The Mainland implements a 17% value-added tax (now reduced to 13%), and export companies need to pass""Exemption, credit and refund" process applies for tax refunds, and the average tax refund rate is about 9%. Although this system can enhance export competitiveness, there are problems such as delayed tax refunds and risks of tax fraud. Hong Kong companies naturally avoid these complexities because they do not involve the value-added tax link.

At the operational level, mainland export tax refunds need to be submittedThe review period for more than ten kinds of materials, such as customs declarations and value-added tax invoices, is usually 2-3 months. Hong Kong companies only need to complete regular import and export declarations, saving a lot of compliance costs. Data shows that the average customs clearance time for Hong Kong export companies only takes 1.5 hours, and the efficiency is far higher than that of mainland ports.

The actual tax of enterprisesFinancial planning

Multinational enterprises often use Hong Kong's tax system to design tax structures. For example, setting up trading companies in Hong Kong and retaining profits in a low-tax environment through the "buy-out-sell-out" model. This arrangement essentially achieves ""Full-link tax rebate", but it must comply with economic substance requirements and transfer pricing rules to avoid being identified as a shell company.

For high value-added products, companies can adopt the "Hong Kong order + mainland processing" model. Taking advantage of CEPA's zero-tariff policy, mainland processing linksThe value-added tax paid can obtain tax-free treatment through "Hong Kong status". The comprehensive tax burden of this model can be reduced by 8-12 percentage points compared with pure mainland exports, and has become a mainstream choice in the electronics, jewelry and other industries.

Policy Development Trend Outlook

With the rise of the international anti-tax avoidance wave, Hong Kong's tax system is also facing reform pressure. The minimum tax rate of 15% implemented in 2023 may weaken some tax advantages, but the tax-free characteristics of the export link will not change. The Hong Kong government has made it clear that it will maintain the free port policy, which is a core pillar in maintaining international competitiveness.