How do I claim offshore profits tax exemption in Hong Kong?

There is no separate application or exemption certificate. An offshore claim is simply a position taken in your return that certain profits have a source outside Hong Kong.

Steps

1. Work out, transaction by transaction, where the profit-producing operations took place (for trading: where contracts of purchase and sale were made, goods sourced and sold, who negotiated).
2. Exclude the offshore profits from the tax computation. Apportion expenses between offshore and onshore income.
3. Report the excluded offshore profits in the profits tax return (the return has specific items for this).
4. Submit the schedules the Inland Revenue Department (IRD) asks for, such as offshore profits and apportionment of related expenses.
5. Keep the documents: contracts, emails, shipping and payment records, who travelled where, board minutes.

What the IRD says. Taxpayers should be ready to prove in their returns, with supporting documentary evidence, that a profit was derived outside Hong Kong.

Limits. An offshore claim does not remove tax on Hong Kong-sourced income, and it does not override the foreign-sourced income exemption (FSIE) regime for foreign-sourced passive income of multinational group members. Claims for interest and services income tend to attract particular attention.

For a significant arrangement you can ask the IRD for an advance ruling.

If the IRD rejects the claim, you can object within one month of the assessment notice.