What is the profits tax rate for a Hong Kong company?
Under the two-tiered system, a corporation pays 8.25% on its first HK$2 million of assessable profits and 16.5% on the rest. The lower rate is available to only one entity in a group of connected entities. This applies from year of assessment 2018/19 onwards.
For a corporation, two rates apply to assessable profits for each year of assessment (which runs from 1 April to 31 March):
| Slice of assessable profits | Rate |
|---|---|
| First HK$2,000,000 | 8.25% |
| Remainder | 16.5% |
Before 2018/19 the single corporate rate was 16.5%. The 8.25% rate is half the headline rate.
Points to note:
- One entity per connected group. If you have connected entities, only one can be nominated for the lower tier (see the separate answer).
- Assessable profits, not accounting profit. Tax is charged after the tax computation adjusts the accounts for non-deductible expenses, depreciation allowances, exempt items and losses brought forward.
- Partnerships with corporate partners have the HK$2 million threshold shared among partners in the profit-sharing ratio.
- Concessionary rates exist for specific activities (for example certain qualifying treasury, insurance and IP income), but they are not the general rule.
- One-off reduction. For 2025/26 the final tax is reduced by 100% up to HK$3,000 (see the Budget answer).
The Budget for 2026-27 made no change to these rates.
Legal basis
- Inland Revenue Ordinance (Cap. 112), Schedule 8
Sources
Applies to YA 2025/26 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Does Hong Kong have VAT, GST or sales tax?No. Hong Kong has no value-added tax, goods and services tax or sales tax. The only taxes on income are profits tax, salaries tax and property tax, plus duties such as stamp duty. The government also confirms there is no capital gains tax and no withholding tax on dividends or interest.
- What profits tax rate do sole proprietors and partnerships pay in Hong Kong?Unincorporated businesses pay 7.5% on the first HK$2 million of assessable profits and 15% on the remainder, from year of assessment 2018/19. This is the two-tiered system. As with companies, only one entity in a group of connected entities can use the lower rate.
- What are the salaries tax rates in Hong Kong?For 2025/26 the progressive scale is 2%, 6%, 10%, 14% on successive HK$50,000 bands, then 17% on the rest. Tax cannot exceed the standard rate on net income before allowances: 15% on the first HK$5 million and 16% above. The lower of the two results applies.
- What are the personal allowances for Hong Kong salaries tax?For 2025/26 the basic allowance is HK$132,000, married person's HK$264,000 and each child HK$130,000. From 2026/27 these rise to HK$145,000, HK$290,000 and HK$140,000 respectively, under the 2026-27 Budget law gazetted on 22 May 2026. The IRD applies new amounts to provisional tax automatically.
- How does property tax work for rental income in Hong Kong?Property tax is charged on the owner of land or buildings in Hong Kong at the standard rate of 15% on net assessable value. Net assessable value is the rent received less rates paid by the owner and a 20% statutory allowance for repairs and outgoings. Companies that rent property are usually under profits tax instead.