Financial statement of a company needs to cover all transactions undertaken by a company disregarding where those transactions are carried out. This means even non-taxable offshore income needs to be reported in the financial statement.

Therefore, offshore income needs to be stated in "Tax Computation" in order to claim for non-taxability. Sufficient evidence needs to be submitted in order to support the claim.

Offshore income claim is not automatic. It needs to be applied. It can be done in 2 ways:

- Advance Ruling :
9702; Before you start the operation, write to HK tax department (IRD), describe your intended operation and request for "Advance Ruling";

9702; The fee for this starts from around USD6, 500;

- Tax Return Filing :
9702; What documents are required for Tax Return Filing?

Item 1 : Financial Statement (in case of limited liability company, this should be audited by Hong Kong CPA);

Item 2 : Tax computation

Item 3 : Offshore operation tax exemption application

For a company does not need to apply for tax exemption, only Item 1 and 2 are required to be submitted to HK tax department.

When tax exemption application is required, Item 3 is required as well.

In Item 1, all income (inshore and offshore) of the taxpayer company should be reported.
In Item 2, tax payable needs to be calculated according to tax rules in HK;
In Item 3, at least below 2 document sets are included:

- Organization Chart (Company function structure) showing which function is performed offshore
- Walk-Through document, which is an example of a deal showing how an offshore income business is handled. (please select one of the largest in amount and typical) .