Profits tax for a Hong Kong limited company, with the two-tier benefit on the first HK$2 million.
Profits tax payable
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Tax on first HK$2m
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Tax on remainder
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Effective rate
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Profit after tax
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Your breakdown
Updates live as you type| Tier | Profit | Rate | Tax |
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How Hong Kong taxes company profit
Hong Kong runs one of the simplest corporate tax systems among major financial centres. There is profits tax on the assessable profits of a company carrying on business here, and that is essentially the whole story. No separate surcharge, no local or provincial company tax, no tax on the dividends the company later pays out, and no capital gains tax on a genuine disposal of a capital asset. The structure that does matter is the two tiers: a lower rate on the first slice of profit and a standard rate above it. This calculator estimates the bill for a single limited company and lets you toggle whether the two-tier benefit is available.
One subtlety trips up groups. The lower-rate tier can be claimed by only one company among a set of connected entities, so a group with several Hong Kong subsidiaries cannot multiply the benefit across all of them. The toggle in this tool exists for exactly that case: if your company is the one nominated to enjoy the lower rate it stays on, and if another group member has claimed it, switch it off and the whole profit is taxed at the standard rate.
A $3 million profit under the two tiers
Take $3 million of assessable profits with the two-tier benefit claimed. The rates this calculator applies are 8.25 percent on the first $2 million and 16.5 percent above it. The first tier produces $165,000, and the remaining $1 million at 16.5 percent adds another $165,000, for a total of $330,000. That is an effective rate of 11 percent on the whole $3 million, comfortably below the headline 16.5 percent, and it leaves $2.67 million of profit after tax. The lower tier is doing real work here.
Switch the toggle to flat 16.5 percent and the same $3 million attracts $495,000, so the two-tier benefit is worth $165,000 to this company. The chart contrasts the two bills.
Assessable profits are not your accounting profit
The figure you feed this calculator should be assessable profits, which is the accounting profit adjusted for tax. Capital expenditure is not deducted as such but may attract depreciation allowances; entertainment and certain provisions are often disallowed; and profit that is genuinely offshore in source may fall outside Hong Kong profits tax altogether under the territorial principle. That last point is significant: Hong Kong taxes profit arising in or derived from Hong Kong, so a company with offshore-sourced income can have assessable profits well below its bottom line. Get the assessable figure from your tax computation, not straight off the income statement, and treat the rates and the $2 million threshold here as the model's 2025/26 assumptions to verify with the Inland Revenue Department.
Common questions
Does my company pay tax on the dividends it receives or pays?
Neither, in the ordinary case. Dividends are not taxable in the recipient's hands in Hong Kong, so dividend income a company receives is generally not part of assessable profits, and dividends it pays to shareholders are not taxed again at the company level or in the shareholders' hands. This is part of why Hong Kong holding structures are popular. It also means the after-tax profit this calculator shows can usually be distributed to owners without a further tax layer.
When is profits tax actually due?
After the year of assessment, on the basis of a return and a tax computation, and the Inland Revenue Department typically also raises a provisional profits tax for the coming year at the same time. A profitable young company can therefore face a final bill plus a provisional payment in one demand, which is a cash-flow shock if it is not planned for. Budget for more than the single-year figure this tool shows in your first profitable year.