What is the corporate tax rate in Hong Kong?

In Hong Kong, businesses pay what is known as “profits tax” on assessable profits earned out of business activities conducted within the territory. The present system of taxation is as follows:

Two-tiered corporate tax rate structure for corporations in Hong Kong:

• 8.25% on the first HKD 2 million of assessable profits.
• 16.5% on any assessable profits above HKD 2 million.

Unincorporated businesses (sole traders or partnerships):

• 7.5% on the first HKD 2 million of assessable profits.
• 15% on any assessable profits above HKD 2 million.

The above rates can only be utilized if profits earned by the business derive from within Hong Kong.

It is important for businesses to note that the lower-tier rate (8.25%) only applies up to the HKD 2 million threshold and that entities must meet the criteria and nominated status if part of a group of connected entities.

This clarified and competitive tax rate structure is a supportive tool for long-term planning of entities operating within and/or through Hong Kong.