Hong Kong Media & Publishing Tax — Expert Advisory

Advertising revenue earned by a HK media company from local Hong Kong advertisers is clearly HK-source income and fully taxable. Revenue from global digital advertising (e.g., Google AdSense, programmatic advertising for international audience) may have an offshore element. The IRD will assess the source based on where the value-creating activity occurs — typically where content is created and where the audience is located.

Under s.20B of the IRO, royalties paid to non-resident copyright holders for use of their content in Hong Kong are subject to withholding tax at an effective rate of approximately 4.95% of the gross payment (30% of the 16.5% profits tax rate, subject to the deemed basis). This applies to news wire services, image libraries, foreign TV format licences, and music licences.

It depends on the nature of the content. News production costs and short-form digital content costs are generally revenue expenditure and deductible in full. Feature films, TV series, and long-form content that has a useful life of more than one year may need to be capitalised and amortised over the content's useful economic life or until the content license expires.

Subscription revenue is generally recognised over the subscription period as the service is provided. Annual subscriptions received in advance should be deferred and recognised monthly. This ensures that profits tax is assessed in the period when the revenue is earned, not when the cash is received, which is more accurate and avoids distortions in taxable profit.

Yes. Costs incurred in developing original content, software, or other copyright works for use in a media business are generally deductible as they relate to revenue-producing activities. If the copyright is separately identified and has a separately assessable life, it may be treated as an intangible asset and amortised. Costs to acquire existing copyrights are capital expenditure.