How the two-tiered profits tax rates work
Since the 2018/19 year of assessment, Hong Kong charges profits tax at two tiers. The lower rate applies to the first $2,000,000 of assessable profits; the normal rate applies to the rest.
| Business | First $2,000,000 | Above $2,000,000 |
|---|---|---|
| Corporations | 8.25% | 16.5% |
| Unincorporated businesses (sole proprietorships, partnerships) | 7.5% | 15% |
Connected entities: if a business has one or more connected entities (for example, companies under the same control, or two sole proprietorships owned by the same person), only one of them – the one nominated – can use the two-tiered rates for a year. The others pay the normal rate on all their profits. Tick the box in the calculator if this applies to you.
Tax reduction
2025/26: profits tax is reduced by 100%, up to $3,000 per business (law gazetted 22 May 2026). 2026/27: no reduction announced as of 21 Oct 2026.
Worked examples (IRD)
Corporation, profits $1,500,000: 8.25% × $1,500,000 = $123,750 (normal rate would be $247,500).
Corporation, profits $2,500,000: 8.25% × $2,000,000 = $165,000 + 16.5% × $500,000 = $82,500 → $247,500.
Partnership, profits $2,500,000: 7.5% × $2,000,000 = $150,000 + 15% × $500,000 = $75,000 → $225,000.
Corporation with a connected entity already using the two tiers, profits $1,500,000: 16.5% on all → $247,500.
These are the IRD's illustrations (before any one-off reduction). For 2025/26, the $3,000 reduction would then be taken off, e.g. $123,750 − $3,000 = $120,750.
What this calculator does not cover
- Partnerships with corporate partners (the $2,000,000 threshold is shared by profit-sharing ratio).
- Concessionary rates (for example qualifying corporate treasury centres, aircraft and ship leasing, reinsurers, the 5% rate for eligible IP income) and exempt income.
- Working out assessable profits themselves, loss set-off and depreciation allowances.
- Personal assessment for sole proprietors and partners, and provisional tax.
Frequently asked questions
What is the profits tax rate in Hong Kong?
For corporations, 8.25% on the first $2,000,000 of assessable profits and 16.5% on the rest. For unincorporated businesses, 7.5% and 15%.
Can every company in a group use the lower rate?
No. Where entities are connected, only one nominated entity can be charged at the two-tiered rates for a year of assessment.
Is there a profits tax reduction for 2025/26?
Yes: 100% of the tax, capped at $3,000 per business. It is applied in the final assessment and does not reduce provisional tax.
Do I need to elect the two-tiered rates?
A business with no connected entity simply declares in its tax return that it is chargeable at the two-tiered rates. A business with connected entities must be the nominated one.
Is my data stored?
No. Everything is worked out in your browser.
Official sources
Every figure on this page was checked against these pages on 21 Oct 2026.