The Hong Kong tax system is territorial in nature and employs a profits tax. The tax base is the net profits arising in or derived from Hong Kong from trade, profession, or business. Capital gains and foreign-source income are not taxable even if remitted to Hong Kong.
The profits tax is payable by every person, including corporations, partnerships, and sole proprietorships, which carry on a trade, profession, or business in Hong Kong. Hong Kong branches and subsidiaries of foreign companies are subject to the same tax base.