Henry Kwong Tax - International

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Henry Kwong Tax - International

Welcome to Henry Kwong Tax page. This is the personal page of Henry for China, Hong Kong and International Tax Services.

He is the Senior Tax Advisor at ONC Lawyers. Henry is a qualified Certified Public Accountant (CPA) and Chartered Tax Adviser (CTA).

03/09/2026

𝐈'𝐯𝐞 𝐧𝐞𝐯𝐞𝐫 𝐬𝐞𝐞𝐧 𝐚 𝐛𝐮𝐲𝐞𝐫 𝐫𝐞𝐠𝐫𝐞𝐭 𝐜𝐨𝐧𝐝𝐮𝐜𝐭𝐢𝐧𝐠 𝐭𝐡𝐨𝐫𝐨𝐮𝐠𝐡 𝐭𝐚𝐱 𝐝𝐮𝐞 𝐝𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞.

I have seen buyers regret skipping it.

A few years ago, I reviewed a cross-border acquisition involving a manufacturing business. On the surface, everything appeared to be in order.

The financial statements looked clean.

Tax filings had been submitted.

There were no obvious warning signs.

But as the review progressed, several issues emerged.

Transfer pricing documentation was incomplete.

Certain deductions lacked proper support.

Some historical tax positions could have become problematic if challenged by the authorities. None of these issues had been identified during the initial stages of the transaction.

And that's exactly what makes tax risk dangerous. It's often invisible until somebody looks closely. The good news is that uncovering a problem before completion gives a buyer options.

You can adjust valuation.

You can negotiate protections.

Or you can walk away.

After completion, those same issues often become your responsibility. That's why I view tax due diligence as more than a compliance exercise.

It's a tool for understanding what you're actually buying.

01/09/2026

𝐎𝐧𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐛𝐢𝐠𝐠𝐞𝐬𝐭 𝐦𝐢𝐬𝐜𝐨𝐧𝐜𝐞𝐩𝐭𝐢𝐨𝐧𝐬 𝐈 𝐡𝐞𝐚𝐫 𝐢𝐬:

"Family offices are only for billionaires."

The reality is very different.

Many families with substantial investments, business interests, and international assets could potentially benefit from Hong Kong's Family Office Tax Concession Scheme, yet never explore it because they assume they're not large enough.

What surprises most people is that the value isn't only about tax.

A properly structured family office can centralize investment management, improve succession planning, simplify governance, and create greater clarity around long-term wealth preservation.

Of course, qualifying isn't automatic. Asset thresholds, family ownership requirements, management structures, and compliance obligations all need to be considered carefully.

But when a family qualifies, the tax efficiency can be significant.

Whenever I review a family's wealth structure, I don't start by asking how much tax they're paying.

I start by asking whether their assets are being managed through the right structure.

Often that's where the biggest opportunities are found.

27/08/2026

𝐌𝐨𝐬𝐭 𝐩𝐞𝐨𝐩𝐥𝐞 𝐭𝐡𝐢𝐧𝐤 𝐬𝐭𝐚𝐦𝐩 𝐝𝐮𝐭𝐲 𝐢𝐬 𝐣𝐮𝐬𝐭 𝐚𝐧𝐨𝐭𝐡𝐞𝐫 𝐮𝐧𝐚𝐯𝐨𝐢𝐝𝐚𝐛𝐥𝐞 𝐜𝐨𝐬𝐭 𝐨𝐟 𝐛𝐮𝐲𝐢𝐧𝐠 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲.

In my experience, that's often not true.

Not because there are loopholes to exploit, but because the structure of a transaction can have a huge impact on the final tax bill.

I recently reviewed a commercial property acquisition in Hong Kong worth HK$50 million. The buyer had already accepted the expected stamp duty cost as part of the deal.

After reviewing the transaction, I identified an alternative ownership structure that achieved the same commercial objective while reducing stamp duty exposure by more than HK$2 million.

- Same asset.
- Same transaction.
- Different structure.

The interesting part is that stamp duty isn't determined only by the property value. Factors such as who acquires the asset, how the acquisition is structured, the type of property involved, and the ownership history can all affect the outcome.

That's why I always tell clients the same thing:

Don't ask how much stamp duty you'll pay.

Ask whether the transaction has been structured efficiently before you commit.

By the time contracts are signed, many planning opportunities have already disappeared.

25/08/2026

𝐀 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐨𝐰𝐧𝐞𝐫 𝐭𝐡𝐨𝐮𝐠𝐡𝐭 𝐭𝐡𝐞 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠-𝐂𝐡𝐢𝐧𝐚 𝐃𝐓𝐀 𝐚𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜𝐚𝐥𝐥𝐲 𝐚𝐩𝐩𝐥𝐢𝐞𝐝 𝐭𝐨 𝐡𝐢𝐬 𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞.

The company operated through Hong Kong.

The income came from mainland China.

On the surface, everything looked straightforward.

The assumption was simple:

"We have a Hong Kong company, therefore treaty benefits should apply."

After reviewing the structure, a different picture emerged.

Certain requirements relating to beneficial ownership and business substance had never been properly considered.

The treaty existed.

The challenge was proving eligibility.

This is a situation I've encountered more often than many business owners expect.

The Hong Kong-China Double Taxation Agreement offers valuable opportunities to reduce double taxation, withholding tax and improve tax efficiency.

However, tax treaties are rarely automatic.

Eligibility often depends on how the structure operates in reality rather than how it appears on an organizational chart.

The most successful cross-border structures are usually not the most complicated.

They are the ones that can clearly demonstrate why treaty benefits should apply.

The question is no longer whether the DTA exists.

The question is whether your business can successfully support a treaty claim when it matters.

20/08/2026

𝐎𝐧𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐛𝐢𝐠𝐠𝐞𝐬𝐭 𝐦𝐢𝐬𝐜𝐨𝐧𝐜𝐞𝐩𝐭𝐢𝐨𝐧𝐬 𝐚𝐛𝐨𝐮𝐭 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠 𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬

Many people assume that once a Hong Kong holding company is established, the tax benefits automatically follow.

In practice, that's rarely how it works.

I recently reviewed a structure where a holding company had been operating for years.

Dividends were being received.

Investments were being managed.

Everything appeared to be functioning normally.

The issue?

Several potential tax efficiencies were never properly evaluated.

The company existed. The strategy behind it did not.

A Hong Kong holding company can be a powerful vehicle for international investments and cross-border ownership structures.

However, the outcome often depends on details that are overlooked during the setup stage.

Questions around substance, management control, income source, and treaty eligibility can significantly influence the result.

The difference between a well-designed structure and a poorly planned one is often not visible on the incorporation documents.

It becomes visible later when dividends are distributed, investments are sold, or tax authorities begin asking questions.

Setting up a holding company is easy.

Designing one properly is where the real work begins.

18/08/2026

𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠'𝐬 𝐑𝐞-𝐝𝐨𝐦𝐢𝐜𝐢𝐥𝐢𝐚𝐭𝐢𝐨𝐧 𝐑𝐞𝐠𝐢𝐦𝐞 𝐢𝐬 𝐠𝐞𝐧𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐩𝐥𝐞𝐧𝐭𝐲 𝐨𝐟 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐢𝐨𝐧. 𝐇𝐞𝐫𝐞'𝐬 𝐰𝐡𝐲.

When most business owners hear the term "re-domiciliation," they immediately assume it means starting over:

- New company
- New contracts
- New relationships
- New compliance obligations

The reality is quite different.

Hong Kong's new regime allows eligible companies to move their place of incorporation while maintaining legal continuity.

For businesses operating across multiple jurisdictions, that can be a significant strategic option.

I've spoken with founders who established companies years ago in jurisdictions that made sense at the time.

As their operations expanded across Asia, those original structures no longer aligned with how the business actually operated.

The introduction of the re-domiciliation regime changes the conversation.

Instead of asking:

"Should we create another company?"

Businesses can now ask:

"Is our current jurisdiction still the best place for our future growth?"

For some companies, the answer will still be yes.

For others, Hong Kong's treaty network, tax framework, and regional position may make the conversation worth having.

The regime is new. But the strategic questions behind it are becoming increasingly relevant.

13/08/2026

𝐖𝐡𝐲 𝐚𝐫𝐞 𝐦𝐨𝐫𝐞 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐬𝐮𝐝𝐝𝐞𝐧𝐥𝐲 𝐚𝐬𝐤𝐢𝐧𝐠 𝐚𝐛𝐨𝐮𝐭 𝐭𝐡𝐞 𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐞 𝐨𝐟 𝐑𝐞𝐬𝐢𝐝𝐞𝐧𝐭 𝐒𝐭𝐚𝐭𝐮𝐬 (𝐂𝐨𝐑)?

A few years ago, most business owners barely paid attention to it.

Today, it has become one of the most discussed documents in cross-border tax planning.

Recently, I reviewed the structure of a Hong Kong company receiving dividend income from Mainland China. The owner viewed the CoR as routine paperwork and assumed it had little impact on the business.

After examining the group's tax position, it became clear that the document was linked to potential treaty benefits that could affect the overall tax burden on cross-border income.

What surprised the owner wasn't the application process.

It was realizing that the value of the CoR depends far more on the underlying business structure than on the certificate itself.

Questions such as below often become just as important as obtaining the certificate:

• Who is the beneficial owner of the income?
• Where is management exercised?
• Does the company have sufficient substance?

Many companies focus on the application.

In my experience, the more important exercise is understanding whether the structure is actually positioned to benefit from the treaty provisions behind it.

The CoR may be a document.

But the planning behind it is where the real value often lies.

11/08/2026

𝐀𝐟𝐭𝐞𝐫 𝐚 𝐃𝐞𝐦𝐞𝐫𝐠𝐞𝐫, 𝐈𝐬 𝐘𝐨𝐮𝐫 𝐂𝐛𝐂 𝐅𝐢𝐥𝐢𝐧𝐠 𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐒𝐭𝐢𝐥𝐥 𝐑𝐢𝐠𝐡𝐭?

A Hong Kong-headquartered group recently restructured after a divestment and assumed its Country-by-Country reporting position would simply follow the old group history. That assumption can be risky.

The latest IRD clarification on demerger cases is a reminder that post-deal reporting needs its own review.

The example discussed was highly relevant for real-world transactions: a Hong Kong entity leaves one CbC reportable group, becomes the new ultimate parent of a separate group, and then has to determine its Hong Kong filing obligation for that year. The IRD’s position is that if the new Hong Kong-headed group meets the revenue threshold based on the immediately preceding year, it may need to file a CbC notification and return in Hong Kong for Year 1. If the new group is foreign-headed, the Hong Kong filing position may depend on the rules in the ultimate parent entity’s jurisdiction.

Our observation is the key commercial point: groups that underwent demergers in prior years may need to revisit positions already adopted. Where the historic filing treatment is inconsistent with the IRD’s clarification, corrective action may be needed.

For CFOs and tax directors, this is exactly the kind of issue that falls between transaction teams and compliance teams. The deal closes, the structure changes, and the reporting assumption quietly stays unchanged.

That is where exposure builds.

If your group has completed a carve-out, disposal or demerger involving Hong Kong entities, this is a useful time to revisit the CbC narrative before the IRD does.

06/08/2026

𝐑𝐨𝐲𝐚𝐥𝐭𝐲 𝐈𝐧𝐜𝐨𝐦𝐞 𝐑𝐞𝐜𝐞𝐢𝐯𝐞𝐝 𝐋𝐚𝐭𝐞𝐫, 𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐓𝐚𝐱 𝐓𝐫𝐢𝐠𝐠𝐞𝐫𝐞𝐝 𝐋𝐚𝐭𝐞𝐫?

A client involved in offshore trademark licensing assumed the withholding tax analysis would follow the accounting accrual. Under Hong Kong’s latest Foreign-sourced Income Exemption (“FSIE”) interaction point, that assumption may no longer hold.

This is one of the more commercially underrated clarifications from the recent IRD discussions.

Where offshore sub-licensing income is taxed under FSIE on a received basis, the corresponding royalty expense paid to a non-resident may only become deductible when that income is received in Hong Kong. The IRD confirmed that, in such a case, the withholding obligation would arise in that later year of receipt, because that is the point at which the expense becomes deductible.

That creates a practical timing mismatch between the accounting recognition of royalty expense and the tax timing of the withholding obligation.

Our comment is especially useful for CFOs here. It noted that voluntarily accelerating taxation of offshore royalty income into the year of accrual may not always be the best commercial answer unless receipt in Hong Kong is sufficiently certain. Instead, businesses may need to review licensing agreements, pricing terms and tax-borne clauses much earlier in the contracting process.

This is a strong reminder that FSIE is not only changing whether income is taxed. It is changing when connected obligations arise.

For finance teams overseeing IP structures, cross-border licensing and cash pooling, timing now matters as much as character.

If your group licenses or sublicenses IP across borders through Hong Kong, it may be worth reviewing whether your current agreement terms still match the tax timing under FSIE.

04/08/2026

𝐖𝐡𝐞𝐧 𝐓𝐚𝐱𝐚𝐛𝐥𝐞 𝐈𝐧𝐜𝐨𝐦𝐞 𝐇𝐚𝐬 𝐍𝐨 𝐌𝐚𝐭𝐜𝐡𝐢𝐧𝐠 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐢𝐧 𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠

One client had what looked like a routine group financing arrangement: funds borrowed from an overseas group company, then on-lent through Hong Kong to another affiliate. Commercially, it made sense. Tax-wise, the position became much harder.

Why? Because the income and deduction sides may not move together.

The latest IRD discussion again highlighted the asymmetry many groups already feel in practice. Interest income may be taxable in Hong Kong, whether because it is onshore under the operations test or because offshore income is taxed under FSIE when received in Hong Kong without meeting the relevant conditions. Yet the related interest expense may still fail the restrictive deduction rules in section 16(2).

Our observation captures the business concern well: taxpayers can be pushed toward taxation on a gross, rather than net, return. We similarly noted that there is no current plan for a full-scale review, although the IRD signaled that targeted relaxations for particular industries or business activities might still be explored.

For CFOs, this is not an abstract policy issue. It affects effective tax rate, platform location decisions, intra-group financing flows and even whether Hong Kong is used at all in a treasury chain.

The practical question is no longer just “Is the income taxable?” It is “What happens to the cost base if it is?”

That is where many structures start to lose efficiency.

If your group uses Hong Kong in treasury, funding or back-to-back financing arrangements, now is a good time to model the tax asymmetry rather than discovering it during assessment.

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