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Hong Kong Corporate Tax Calculator
Calculate Hong Kong profits tax using the latest two-tier tax regime.
First HKD 2,000,000 profits taxed at 8.25%.
Remaining profits taxed at 16.5%.
Hong Kong operates one of the most competitive corporate tax regimes among major financial centres. Under the two-tier profits tax regime introduced in 2018, the first HK$2,000,000 of assessable profits of a corporation is taxed at 8.25 percent, with profits above that threshold taxed at 16.5 percent. For unincorporated businesses such as sole proprietorships and partnerships, the corresponding rates are 7.5 percent on the first HK$2,000,000 and 15 percent above. This calculator helps you estimate your Hong Kong profits tax liability based on annual revenue, business expenses, and whether your business qualifies for offshore tax exemption.
Hong Kong applies a territorial tax system, which means only profits sourced in Hong Kong are subject to profits tax. Profits genuinely earned from activities carried out outside Hong Kong may qualify for the offshore tax exemption, reducing the effective tax rate to zero on qualifying profits. The Inland Revenue Department reviews offshore claims rigorously, and the burden of proving offshore nature sits with the taxpayer. Our calculator includes a toggle for offshore exemption so you can model both scenarios side by side.
Calculator Inputs
| Input | Range and Meaning |
|---|---|
| Annual Revenue | Slider from HK$100,000 to HK$50,000,000. Default HK$5,000,000. Represents total gross income. |
| Business Expenses | Slider from HK$0 to HK$30,000,000. Default HK$2,000,000. Represents allowable deductions including cost of sales, salaries, rent, and depreciation. |
| Offshore Tax Exemption | Toggle No / Yes. If Yes, calculator treats profits as offshore-sourced and applies zero tax (subject to IRD approval). |
Tax Rates and Formula
| Profit Tier | Corporation Rate | Unincorporated Rate |
|---|---|---|
| First HK$2,000,000 | 8.25 percent | 7.5 percent |
| Above HK$2,000,000 | 16.5 percent | 15 percent |
| Qualifying Offshore Profits | 0 percent (subject to IRD) | 0 percent (subject to IRD) |
Formula: Assessable Profits = Annual Revenue − Allowable Business Expenses. Profits Tax = (8.25% × min(Profits, HK$2,000,000)) + (16.5% × max(0, Profits − HK$2,000,000)).
Worked Examples
Example 1: Small consulting firm
| Profit Tier | Corporation Rate | Unincorporated Rate |
|---|---|---|
| First HK$2,000,000 | 8.25 percent | 7.5 percent |
| Above HK$2,000,000 | 16.5 percent | 15 percent |
| Qualifying Offshore Profits | 0 percent (subject to IRD) | 0 percent (subject to IRD) |
Example 2: Mid-sized trading company
| Annual Revenue | HK$15,000,000 |
| Business Expenses | HK$8,000,000 |
| Assessable Profits | HK$7,000,000 |
| Tax on First HK$2,000,000 | 8.25% × HK$2,000,000 = HK$165,000 |
| Tax on Remaining HK$5,000,000 | 16.5% × HK$5,000,000 = HK$825,000 |
| Total Profits Tax Payable | HK$990,000 (effective rate 14.14%) |
Example 3: Offshore-qualifying company
| Annual Revenue (all offshore) | HK$10,000,000 |
| Business Expenses | HK$3,000,000 |
| Assessable Profits | HK$7,000,000 |
| Offshore Exemption Applied | Yes (subject to IRD review) |
| Profits Tax Payable | HK$0 if exemption approved |
How Lion Business Co. Helps
Hong Kong's tax regime is competitive but compliance is increasingly scrutinised. Offshore tax exemption claims require detailed documentation of where business operations actually take place, where contracts are negotiated and signed, and where decision-making occurs. Lion Business Co. supports clients with offshore tax exemption application preparation, profits tax return filing, IRD correspondence handling, and tax planning across Hong Kong, Singapore, and offshore jurisdiction structures.
