Two-tier tax and territorial source: what a Hong Kong company pays, and on which profits
This page is based on public information as of 2026-10-06 (IRD profits tax page, two-tier FAQ, and the territorial source guide).
Hong Kong charges profits tax only on profits arising in Hong Kong. Offshore is not automatic. A lower rate still applies only to the portion of profits that is treated as arising in Hong Kong and that is eligible for that rate.
The rates that apply
The standard rate is 16.5% for a corporation and 15% for an unincorporated business. Under the two-tier rates, a nominated corporation pays 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder. An unincorporated business pays 7.5% on the first HK$2 million and 15% on the remainder. Where entities are connected, only the nominated one uses the two-tier rates. That limit is on the connected-entities page.
| Item | Who it is for | Nature of eligibility | Legislative stage | As of |
|---|---|---|---|---|
| Item Standard rate (corporation 16.5%, unincorporated business 15%) | Who it is for Corporations and unincorporated businesses | Nature of eligibility Automatic if the conditions are met | Legislative stage Enacted and in force | As of 2026-10-06 |
| Item Two-tier rates (corporation: 8.25% on the first HK$2 million, then 16.5%) | Who it is for The one nominated entity | Nature of eligibility Automatic if the conditions are met | Legislative stage Enacted and in force | As of 2026-10-06 |
This page sits under Tax in the service catalog.
Which profits are charged
Only profits arising in Hong Kong are charged. Offshore is not automatic. Where the principal place of business is in Hong Kong and no business is carried on overseas, the profits of that business are likely to be chargeable to profits tax in Hong Kong.
This page is based on public information as of 2026-10-06 (IRD profits tax page, two-tier FAQ, and the territorial source guide).