Beware of hidden taxes when subscribing to the professional version: Canva and Adobe charge differently—learn how to avoid cross-border digital service taxes

Why Professional Subscription Fees Don't Include VAT but Are Subject to Overseas Digital Services Tax

Although Hong Kong does not implement Goods and Services Tax (GST) or Value Added Tax (VAT), since 2018, under Schedule 17C of the Inland Revenue Ordinance (Cap. 112), a "Remote Sellers' Tax on Electronic Services" applies to qualified cross-border electronic services purchased from non-resident suppliers. This tax targets foreign enterprises with annual global revenue exceeding HK$180,000 that provide digital services to consumers in Hong Kong.

• Canva Pro lists its price as “HK$59/month (inclusive of tax)” on its official website, billed through a locally registered entity. The invoice clearly states “includes overseas digital service tax,” complying with guidelines from the Hong Kong Inland Revenue Department.
• Adobe Creative Cloud uses a separate tax model: the individual professional plan shows “HK$379/month + approx. 5% tax.” Taxes are automatically added at checkout, and invoices are issued by its U.S. headquarters.
• Microsoft 365 Apps for business displays a pricing page showing “HK$88/month,” but during payment, it warns “prices may be subject to additional applicable taxes,” reflecting its hybrid tax structure.

Different platform strategies lead to cost misperceptions: Canva boosts conversion rates with all-inclusive pricing; Adobe and Microsoft offer transparency by itemizing charges, yet this results in final prices higher than advertised. According to a 2023 Consumer Council report, approximately 37% of users miscalculate their spending due to unseen post-display taxes.

Which International Tech Companies Charge Additional Tax to Hong Kong Users?

Several multinational tech giants have complied with Hong Kong’s overseas digital services tax regime, independently adding tax charges on top of base fees to ensure regulatory compliance. Google Workspace, Microsoft 365, Zoom Workplace, and Adobe Creative Cloud all follow this approach.

• Google Workspace Business Plus is priced at HK$198/month, with an extra “Remote Digital Service Tax” of about HK$17.82 (9%) applied at checkout, bringing the total to HK$215.82. The tax is clearly listed on the invoice.
• Microsoft 365 Business Premium is priced at HK$162/month. The website explicitly notes “includes 9% sales tax,” and the system automatically separates the fee from the tax amount—information sourced from Microsoft Hong Kong Support Center announcements (January 2025).
• Zoom Workplace Professional edition costs HK$144/month. At checkout, it displays “Sales Tax (RDS Tax)” of HK$12.96, totaling HK$156.96. This arrangement is documented in Zoom's 2024 financial report footnotes regarding Asia-Pacific compliance.
• Adobe Creative Cloud All Apps for enterprise is HK$568/month, with a separate field listing “9% RDS Tax” amounting to HK$51.12—source: Adobe Hong Kong official terms page (updated version 2025).

This “line-item” pricing design meets IRD requirements for transparency while improving corporate financial compliance efficiency and facilitating future tax deductions.

Do Electronic Invoices Received from Professional Subscriptions Have Tax Validity?

Electronic invoices received by Hong Kong users after purchasing professional-tier services from overseas platforms can serve as valid tax documentation, provided they are complete and meet the principle of being “necessary expenses incurred in producing assessable income,” thus qualifying as deductible evidence.

• Supplier Name and Address: The invoice header includes the full legal name and physical address of the company registered in the U.S., UK, or Singapore—for example, “Adobe Inc., 345 Park Ave, San Jose”—establishing the transaction party.
• Buyer Information: Includes the Hong Kong business name, Business Registration Number (BRN), and contact details, fulfilling IRD identification requirements for business deductions.
• Service Description and Period: Details such as “Professional Plan – Monthly Subscription (Jan 1–31, 2025)” enhance traceability and justification of expenditure.
• Amount Breakdown: Clearly separates pre-tax amount (e.g., HK$890), tax rate (5%), and tax amount (HK$44.5). Even though Hong Kong has no local VAT, this format aligns with international accounting standards.
• Total Payment Amount: Final total inclusive of all charges; transaction records generated via Stripe or PayPal are considered valid supporting documents.

Payments made through Stripe generate standardized invoices embedded with tax metadata; PayPal only provides summaries, requiring manual linking to subscription details to form a complete record. According to Inland Revenue Department Bulletin IRD Bulletin 23/2020, compliant invoices support profits tax deductions. In the future, SME-focused smart invoice compliance engines are expected to emerge, automatically flagging eligible subscription expenses for deduction.

How to Spot Hidden Fees in Professional Subscription Pricing

"Hidden fees" refer to附加 costs not disclosed in initial pricing but revealed only at checkout, commonly seen on platforms like Adobe, Canva, or Notion. A 2024 Consumer Council report found nearly 60% of Hong Kong users encountered such issues when subscribing to professional plans, primarily due to unclear tax disclosures.

• Check fine print at the bottom of pricing pages, especially phrases like “excludes taxes” or “additional charges may apply”—these often signal tax separation.
• Switch currency to HKD and watch for labels such as “+taxes” or “VAT included.” For instance, Microsoft 365 displays “HK$150/month + taxes.”
• Review the shopping cart for detailed breakdowns. Reputable platforms list taxes separately—for example, Zoom distinguishes between “Subtotal” and “Sales Tax.”
• Search for “Hong Kong Tax Compliance Statement” documents. Both Google Workspace and Slack publish PDFs explaining whether they collect GST or comply with local regulations.
• Use a VPN to simulate access from different regions and compare pricing differences for the same plan in Singapore (7% GST), Taiwan (5% business tax), and Hong Kong to reverse-engineer the tax model.

These steps improve pricing transparency and strengthen corporate financial forecasting. With the Financial Secretary advancing digital service tax reforms in 2024, SaaS platforms may soon be required to uniformly display final consumer prices.

Tax Exemption Channels for Enterprise Bulk Purchases

Under normal circumstances, even bulk enterprise purchases of professional subscriptions remain subject to the overseas digital services tax, as the regime covers all transactions with non-local suppliers. However, if eligibility criteria for the “B2B Reverse Charge Mechanism” are met, front-end tax collection can be waived, with the buyer self-reporting the tax liability to achieve tax neutrality.

According to Section 4.7 of the Inland Revenue Department’s 2023 “Guide to Digital Services Tax for B2B Transactions,” two local startups successfully restructured large-scale professional software procurement under reverse charge arrangements. Such exemptions apply only to signed Enterprise Agreements, not standard online subscriptions, and require the buyer to be a registered business entity in Hong Kong.

To apply for reverse charge exemption, prepare the following:

• Business Registration Certificate (BR Certificate): Proof of being a Hong Kong-registered business
• Form W-8BEN-E: Required by foreign suppliers to confirm the tax residency status of the enterprise
• Valid Tax Residency Certificate: Issued by the Hong Kong Inland Revenue Department, supporting applications for cross-border tax treatment

After submission, businesses must proactively declare both “tax payable” and “tax creditable” amounts in their quarterly Profits Tax Return to balance the tax burden. This mechanism alleviates cash flow pressure but demands robust accounting systems. Looking ahead to 2026, as the OECD integrates its global digital tax framework, Hong Kong is expected to extend the B2B reverse charge mechanism to mid-sized enterprises. Businesses should proactively establish compliance templates to seize early benefits.

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