HK Two-Tier Profits Tax Calculator 2026
Hong Kong's two-tier profits tax taxes the first HK$2 million of assessable profits at 8.25% (half the standard rate), with the remainder at 16.5%. Designed to support SMEs and competitive business environment.
Hong Kong Two-Tier Profits Tax
Introduced 2018. First HK$2 million of assessable profits taxed at 8.25% (corporations) or 7.5% (unincorporated businesses). Profits above HK$2M taxed at standard 16.5% (corporations) or 15% (unincorporated). Designed to provide tax relief to SMEs and entrepreneurs.
Election And Filing
Must elect two-tier rates by ticking the relevant box on Profits Tax Return (BIR51 for corporations, BIR52 for unincorporated). Election is annual. Group connected entities — only ONE company in the group can elect the lower-tier rate per year. Choose the group member with highest tier-1 profit utilisation.
Comparison With Other Jurisdictions
Hong Kong 8.25%-16.5% beats Singapore 17% headline (though SG partial exemption brings effective lower for SMEs). Compares favourably with US 21%, UK 25%, China 25%. Combined with no GST/VAT and no withholding on dividends/interest, HK remains competitive for regional headquarters.
Source: Inland Revenue Department HK Profits Tax Guide 2026, ird.gov.hk. Last updated: May 2026.