HK Profits Tax Calculator 2026-27
Calculate your Hong Kong profits tax for the 2026/27 year of assessment. Enter your assessable profits, choose corporation or unincorporated business, and select whether the entity elects the two-tier concession. The calculator applies official IRD two-tier rates — 8.25%/16.5% for corporations and 7.5%/15% for unincorporated businesses — and shows a side-by-side comparison with and without the two-tier election. Source: ird.gov.hk — Profits Tax.
Tax Calculation Breakdown
| Assessable profits | HK$0 |
| First HK$2,000,000 | HK$0 |
| Remainder | HK$0 |
| Total profits tax payable | HK$0 |
Two-Tier vs Flat-Rate Comparison
What Is Hong Kong Profits Tax?
Hong Kong profits tax is a tax levied on the assessable profits of any person — corporation, partnership, trustee, or sole proprietor — carrying on a trade, profession, or business in Hong Kong. Only profits arising in or derived from Hong Kong are taxable under the territorial source principle; offshore-sourced income falls entirely outside the charge. There is no capital gains tax in Hong Kong — gains from the sale of capital assets such as shares or properties are not subject to profits tax, provided the assets were genuinely held as capital rather than trading stock. The year of assessment runs from 1 April to 31 March; the 2026/27 year covers 1 April 2026 to 31 March 2027. Source: Inland Revenue Department — Profits Tax.
Two-Tier Profits Tax Rates for 2026-27
The two-tier profits tax regime took effect from the year of assessment 2018/19 and applies to both corporations and unincorporated businesses. Only the first HK$2,000,000 of assessable profits benefits from the reduced lower-tier rate; all profits above that threshold are charged at the standard rate.
| Entity Type | First HK$2M | Remainder |
|---|---|---|
| Corporation (limited company) | 8.25% | 16.5% |
| Unincorporated business (sole proprietor / partnership) | 7.5% | 15% |
If no two-tier election is made — or if the entity is not eligible because a connected entity has already nominated itself — the flat standard rates apply: 16.5% for corporations and 15% for unincorporated businesses across all assessable profits.
Two-Tier Election Rules and Connected Entities
The two-tier concession is designed for small and medium enterprises. To prevent a group from splitting profits across multiple entities to multiply the benefit, the law restricts the election to one entity per group. Two entities are "connected" if one controls the other or both are controlled by the same person(s). Where connected entities exist, they must nominate which single entity claims the two-tier rates; all others pay the flat standard rate on 100% of their assessable profits. The nomination is made in the profits tax return (BIR51 for corporations, BIR52 for partnerships, BIR54 for unincorporated businesses) for the relevant year of assessment. For newly incorporated companies or startups without a connected group, no nomination is needed — the two-tier rates apply automatically.
How Hong Kong Profits Tax Is Assessed and Paid
The IRD issues a profits tax return typically 18 to 21 months after the end of the basis period. Most corporations with a 31 March year-end receive BIR51 returns in April each year. The return is due within one month of issue, although tax representatives obtain extended filing deadlines in bulk. Tax assessed is due within one month of the notice of assessment. Provisional profits tax — an advance based on the preceding year's profits — is also charged concurrently. You may apply to hold over provisional profits tax if your assessable profits for the current year are expected to be less than the preceding year's figure, or if you have grounds of objection to the assessment. Objections must be lodged within one month of the date of the notice of assessment.
Frequently Asked Questions
What are the Hong Kong profits tax rates for 2026/27?
For corporations electing the two-tier rates: 8.25% on the first HK$2,000,000 of assessable profits and 16.5% on the remainder. For unincorporated businesses: 7.5% on the first HK$2,000,000 and 15% on the remainder. Without the two-tier election the flat rates are 16.5% (corporations) and 15% (unincorporated businesses).
Can all companies in a group claim the two-tier rates?
No. Only one entity per connected group may elect the two-tier profits tax rates. Connected entities must nominate a single entity to benefit from the lower first-tier rate. All other entities in the group pay the standard flat rate on their full assessable profits.
Is there capital gains tax in Hong Kong?
No. Hong Kong does not levy capital gains tax. Gains from the disposal of capital assets — including shares, property held as investment, and other capital items — are not subject to profits tax. However, gains that are revenue in nature (e.g., trading in shares as a business) may be assessable.
What does "assessable profits" mean for profits tax purposes?
Assessable profits are the net profits from the trade or business arising in or derived from Hong Kong, after deducting allowable business expenses, depreciation allowances, and approved charitable donations. Only Hong Kong-sourced profits are taxable; offshore-sourced profits are excluded under the territorial principle.
When must I file the Hong Kong profits tax return?
The IRD issues profits tax returns (BIR51 for corporations, BIR52 for partnerships, BIR54 for sole proprietors) approximately 18–21 months after the end of the basis period. The return is typically due within one month, though tax representatives receive extended deadlines. Tax is payable within one month of the notice of assessment.
How do I apply for the two-tier profits tax election?
The election is made within the annual profits tax return. For a sole entity with no connected companies, the two-tier rates apply automatically — no separate nomination is needed. Where connected entities exist, the nominating entity indicates its election in its return, and the connected entities report their ineligibility in their own returns.