Hong Kong Corporate Tax
Hong Kong corporate tax is commonly referred to as Profits Tax. APAC Taxation provide profits tax services to Hong Kong companies. We specialise in profits tax for foreign companies in Hong Kong. Hong Kong uses a territorial corporate tax system where companies are taxed only on profits derived from or arisen in Hong Kong. Taxes in Hong Kong are notoriously low in order to attract international companies and international professionals. Profits tax in Hong Kong follows a low rate, and to further incentivize international investment, have multiple tax concessions and incentives available.
This page is intended as a general overview of company tax in Hong Kong. Below will outline when a company is required to pay tax in Hong Kong, how the tax system works, what the profits tax rate is, and what tax incentives are available. This is a high-level guide and as such, will omit numerous conditions. Hong Kong profits tax for expat companies is complex and you should speak to a tax specialist for in depth advice.
When am I required to pay company tax in Hong Kong?
Hong Kong’s Inland Revenue Department (IRD) use a territory system rather than a residency system. A corporate territory tax system only taxes on profits within that territory. If your company is based outside of Hong Kong but makes profit in Hong Kong, you’re required to pay company tax on those profits. If your company is based in Hong Kong but it makes profits outside of Hong Kong then it is not required to pay tax on those profits.
How does Hong Kong Profits Tax work?
The financial year in Hong Kong runs for April 1 to March 31 of the following year. In tax terms this is referred to as a “year of assessment” rather than a financial year. In Hong Kong there is a two-tier corporate tax system that halves the tax rate for the first $2 million of assessable profits.
Hong Kong’s two-tier corporate tax system
There is a difference between incorporated business and unincorporated businesses. Incorporation’s standard rate is 16.5%, whereas unincorporated businesses’ standard rate is 15%. The table below shows the difference, as well as the 50% reduction for the first $2 million in assessable profit. There is a condition to this though – companies with connected entities can only use this concession on one of their entities. They are able to choose which of their entities will claim this benefit.
|Assessable profits||Corporations||Unincorporated businesses|
|First HKD 2 million||8.25%||7.5%|
|More than HKD 2 million||16.5%||15%|
** Note: For multiple entity corporations, only one entity can use the discount on the first $2m.
Hong Kong Corporate Tax Incentives
The Hong Kong IRD offer many tax concessions. For more information on what tax concessions are available for your business, please contact us.
Corporate Tax Services in Hong Kong
- Profits Tax Return
- Hong Kong Tax Residence
- Tax Representative
- Employers Return
- Advance Ruling
- Tax Dispute
- Tax Equalization
- Tax Planning
- Tax Clearance
- Tax Exemption
- Offshore Tax Arrangement
- Transfer Pricing
- Common Reporting Standard (CRS)
- IP Rights Tax
- Retirement Scheme
- Structure Employment Contracts
- Termination Agreement and Comprehensive Package
Need help with your profits tax?
We specialise in helping foreign business with their tax obligations in Hong Kong. For an obligation free discussion as to how we can help, contact us by phone, or fill out our free quote request form.