How large were the one-off profits tax reductions in recent years?
Each recent Budget has cut the final tax by 100% up to a ceiling: HK$20,000 for 2019/20, HK$10,000 for 2020/21 and 2021/22, HK$6,000 for 2022/23, HK$3,000 for 2023/24, HK$1,500 for 2024/25, and HK$3,000 for 2025/26.
The IRD's brief guide lists the one-off reductions of final tax for profits tax, salaries tax and tax under personal assessment. Each is 100% of the tax, up to a ceiling per case:
| Year of assessment | Ceiling |
|---|---|
| 2019/20 | HK$20,000 |
| 2020/21 and 2021/22 | HK$10,000 each |
| 2022/23 | HK$6,000 |
| 2023/24 | HK$3,000 |
| 2024/25 | HK$1,500 |
| 2025/26 | HK$3,000 (2026-27 Budget) |
Points to remember
- Each reduction is a one-off, enacted separately; none is automatic for the following year.
- For profits tax the ceiling applies to each business, as the IRD describes it for 2025/26.
- A reduction applies to the final tax, not provisional tax. Provisional tax for the following year is still based on the earlier year's profits, without the reduction.
- Do not budget on a reduction continuing: the amount has moved up and down.
The ceiling for 2025/26 comes from the 2026-27 Budget; the earlier ones are from the IRD's brief guide for 2025/26, which lists reductions up to 2024/25.
Sources
Applies to YA 2019/20 to 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 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.
- 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.
- How does provisional profits tax work in Hong Kong?Provisional profits tax is an advance payment charged for a year of assessment, calculated from the previous year's assessed profits. It is then offset against the final tax for that year, with any excess applied to the next year's provisional tax or refunded. It is paid in instalments set out on the demand note.
- How can I hold over (reduce) my provisional profits tax?You can apply in writing to pay less or none of your provisional profits tax on prescribed grounds, most commonly if profits for the year are likely to be below 90% of the base figure. Apply at least 28 days before the due date or within 14 days after the demand note is issued, whichever is later.