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Hong Kong Company Profits Tax Guide

Updated:2018-7-30 15:52:22    Source:www.tannet-group.comViews:118

Hong Kong profits tax is a tax levied on the net profits on business. Under the "Inland Revenue Ordinance" from Inland Revenue Department (IRD), profits taxpayers mean persons, including corporations, partnerships, trustees and bodies of persons that profit from carrying on trade, profession or business in Hong Kong. The financial year generally ends on 31 March or 31 December of each year, with a 12-month accounting period. However, the first accounting period for a newly set up company cannot exceed 18 months.

I. Scope of Charge
Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business.

There is therefore no distinction made between residents and non-residents. A resident may therefore derive profits from abroad without suffering tax; conversely, a non-resident may suffer tax on profits arising in Hong Kong. The question of whether a business is carried on in Hong Kong and whether profits are derived from Hong Kong is largely one of fact, however some guidance on the principles applied can be found in cases which have been considered by the Hong Kong Courts and the Privy Council. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong.

If a person sells his flat or any property as part of a scheme of profit-making, it will be regarded as a business and he is required to pay tax on any profit he may make.

II. Profits Tax Rate in Hong Kong
1. Normal rate (for the year of assessment 2008/09 onwards)
(1) Corporations: 16.5%
(2) Unincorporated Businesses: 15%

2. Two-tiered rates (for the year of assessment 2018/19 onwards)
(1) Corporations: 8.25% on assessable profits up to HKD2,000,000; and 16.5% on any part of assessable profits over HKD2,000,000;
(2) Unincorporated Businesses: 7.5% on assessable profits up to HKD2,000,000; and 15% on any part of assessable profits over HKD2,000,000.

III. Requirements on Corporate Tax Filing
The Inland Revenue Department (IRD) of Hong Kong generally issues the corporate profits tax returns on the 1st of April every year. Normally, businesses should file the profits tax return within 1 month from the date of issue. In the case of newly registered businesses, the Inland Revenue Department will issue the profits tax return 18 months after the date of commencement of business or the date of incorporation.

The company has to file a complete set of returns which includes the following:
(1) The specific profits tax return form as issued by the Inland Revenue Department.
(2) A supplementary form as issued by the Inland Revenue Department for your tax data and financial data etc.
(3) A certified copy of the Balance Sheet, Auditor’s Report and Profit & Loss Account pertaining to the basis period.
(4) A tax computation showing how the amount of Assessable Profits (or Adjusted Loss) has been arrived at.

Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512 or 86-755-82143181 or emailing to You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.

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