background image

Retained

  • Statutory Tax Rate 16.5
  • Surtax Based on Taxable Income 0
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 16.5

Statutory Tax Rate

For years of assessment commencing on or after 1 April 2018, a two-tiered profits tax rate regime applies for corporations and unincorporated businesses as follows:

  • 8.25% for assessable profits up to HKD 2 million (7.5% for unincorporated businesses);
  • 16.5% for assessable profits beyond HKD 2 million (15.0% for unincorporated businesses).

Certain enterprises and income are excluded from the two-tiered profits tax rate regime:

  • Those enterprises electing the preferential half-rate tax regimes (e.g., professional reinsurance companies, captive insurance companies, corporate treasury centres, and aircraft leasing companies); and
  • The assessable profits for sums received by or accrued to holders of qualifying debt instruments as interest, gain, or profit that is already taxed at a half-rate (such profits continue to be subject to the current applicable tax rates, i.e., 8.25% or 7.5%, as the case may be, and are not included in determining the HKD 2 million assessable profits threshold for the lower rate of the two-tiered regime).

A restriction also limits the application of the two-tiered regime to only one enterprise nominated from among those that are connected (under the control of the same enterprise or entity - more than 50%).

For years of assessment beginning before 1 April 2018, the profits tax was levied at the single rate of 16.5% (15.0% for unincorporated businesses).