Hong Kong Corporate Income Tax (CIT)

We bring solutions to make life easier for Filing Corporate Tax.

Corporate Tax Services in Hong Kong2023-08-11T09:10:07+00:00

Whether you are in the process of registering or have already registered your company in Hong Kong, it is essential to comply with the country’s regulations and file your corporate tax accordingly to prevent any legal repercussions. Entrust your corporate tax filing to us and experience the advantages of strategic tax planning with our specialized services in Hong Kong.

What Is Corporate Income Tax (CIT)?

In Hong Kong, Corporate Income Tax (CIT) is a fee that companies must pay on their profits. In simpler terms, it is where a portion of a company’s earnings goes to the government. Businesses subtract their expenses, operating costs, and depreciation from revenues from their earnings to figure out how much tax they owe.

Anyone who runs businesses or offers services will need to pay corporate tax, regardless of the size of the company or type of incorporation. Paying corporate tax on time is beneficial for business owners, and it’s different from individual taxes, where there might be deductions for items like medical insurance and other fringe benefits (including retirement plans and tax-deferred trusts.

Check Your Assume Chargeable Income Using Our Free Tool!

New Start-Up exemptions (first 3 years)
Net tax payable
Effective tax rate
Partial Tax exemption
Net tax payable
Effective tax rate

What is the Corporate Tax Rate in Hong Kong?

In Hong Kong, companies are taxed at a certain rate, regardless of type of business entity. Companies without profits do not pay any Profits Tax.


Corporate Tax Rate for Corporated Entities

The profits tax rate for the first $2 million of corporations’ profits is reduced to 8.25%.


Corporate Tax Rate for Unincorporated Entities

The profits tax rate for the first $2 million of corporations’ profits is reduced to 7.5%.

There are also tax obligations related to royalties paid to overseas entities for using intellectual property (usually 4.95% of the royalty payments). However, a reduced rate may apply if a comprehensive double tax agreement/arrangement (CDTA) is in place.

What do I need to File Corporate Tax?

Here is a checklist of things to keep note of before you file your CIT:

Hong Kong Tax Incentives

Foreign tax credits can be claimed by Hong Kong tax residents if they have paid foreign taxes on income earned from a jurisdiction that has a Comprehensive Double Taxation Agreement (CDTA) with Hong Kong SAR, and the same income is subject to tax in Hong Kong SAR. Taxpayers must make efforts to minimize foreign tax payments before claiming tax credits in Hong Kong SAR.

For Hong Kong tax residents who pay foreign taxes on specified foreign-sourced income deemed taxable under the refined Foreign-Sourced Income Exemption (FSIE) regime, foreign tax credits are available regardless of whether the foreign taxes are paid in a jurisdiction with a CDTA with Hong Kong SAR. Again, taxpayers are required to take reasonable steps to minimize foreign tax payments before claiming tax credits in Hong Kong SAR.

Hong Kong has signed CDTAs with several countries to prevent double taxation and promote fair tax treatment. These agreements provide tax relief (in the form of tax credits) for foreign income that is also subject to Hong Kong’s profits tax.

The CDTAs are currently in force in many countries, such as Malaysia, Indonesia, South Korea, and Japan. With these agreements, businesses can manage their tax liabilities more efficiently and avoid being taxed twice on the same income in both Hong Kong and other countries with CDTAs.

Company Tax Exemption

To meet the qualifying conditions for this exemption, the following criteria must be satisfied:

  1. The company should have no customers or suppliers located in Hong Kong.
  2. The business entity’s owner or employees must exclusively operate the business outside of Hong Kong.
  3. The company should not provide any services within Hong Kong.
  4. The services and products offered by the company must not be available or accessible within Hong Kong.
  5. All day-to-day business decisions and service agreements must be executed outside of Hong Kong.
  6. The company should not have any employees based in Hong Kong, and if there are any overseas employees, their visits to Hong Kong must be infrequent.
  7. Lastly, the products manufactured or sold by the company should not enter the territory of Hong Kong.

Your Questions, Answered

Filing of taxes can be daunting. Here is a compilation of the top questions we get asked about corporate tax in Hong Kong to clear your doubts!

Do Hong Kong offshore companies pay taxes?2023-08-08T02:57:30+00:00

Hong Kong offshore companies are exempted from paying taxes. This is because its activities are expected to generate income outside Hong Kong and thus not subjected to taxation as with other corporates that operate within Hong Kong.

Does Hong Kong have an export tax on items exports from HKSAR?2021-06-10T06:49:06+00:00

No, Hong Kong does not have an export tax on items exports from HKSAR.

Who needs to pay taxes in Hong Kong?2021-06-10T06:49:14+00:00

Everyone who receives income in Hong Kong whether through employment or pension is expected by the IRD to pay salaries tax.  

What is two-tier taxation in Hong Kong?2021-06-10T06:49:29+00:00

This is a method of taxation that involves income being taxed twice starting with the first HK$2 million of profits taxed at one-half of the general tax rate of 8.25% for corporations, and the rest of the profits are taxed at a 16.5% tax rate. At the end of the day, it lowers the taxation rate for the first HK$2 million.

What has changed in corporate taxation since its inception?2020-12-18T03:12:54+00:00

The corporate tax in Hong Kong has evolved in terms of rates changing from the initial 10%, a proposition of 50%, and finally to the current 16.5%. However the method of taxation has not changed, it is still taxed from profits gained within the territory. The name has also changed from War Revenue Ordinance to Inland Revenue Ordinance.

Are foreigners treated differently when it comes to corporate taxation in Hong Kong?2020-12-18T03:12:32+00:00

No. The taxation process for both locals and foreigners are more or less the same. For example, income generated out of Hong Kong by either a local resident or foreigner is not taxed.

What is the role of corporate taxation in Hong Kong2021-06-10T06:49:49+00:00

Revenue generated from corporate taxes in Hong Kong goes into the running of government affairs just like in any other country.

It is worth noting that one of the reasons why Hong Kong is considered a tax haven is because the Hong Kong government has several reserves that generate revenues, hence it levies favourable corporate taxes. Some of these government reserves come from the sale or leasing of government-owned properties.

What are the benefits of corporate taxes over personal income taxes?2020-12-18T03:04:41+00:00

Some of the benefits of corporate taxes in Hong Kong is that they often come with:

  • Returns deductions on medical insurance for families, and
  • Fringe benefits such as retirement plans and tax-deferred trusts.
Why is tax avoidance considered an unethical act?2021-06-10T06:50:03+00:00

Tax avoidance is often viewed as attempting to avoid social obligation which is unethical.

Is Hong Kong a tax haven?2020-12-15T01:49:44+00:00

The structure of the taxation system of Hong Kong and its dedication to preserving the secrets of investors makes the country to be popular be referred to as a tax haven state.

Between tax avoidance and tax evasion which is one is worse?2020-12-15T01:49:32+00:00

The straight answer is that tax evasion is illegal and can lead to legal actions while tax avoidance is the process of using legal means to lessen the amount of tax that one needs to pay.

How can I calculate tax avoidance?2021-06-10T09:08:18+00:00

Tax avoidance is computed by dividing the total expenses by the accounting earnings before tax. Tax avoidance is thus a reflection of the aggregate proportion of accounting income payable relative to the accounting earnings.

What is tax avoidance in Hong Kong?2020-12-15T01:44:23+00:00

Tax avoidance is defined as the legal usage of the tax regime that is acceptable in the country to reduce the amount of tax that one should pay as indicated by Hong Kong’s law.

How have Hong Kong’s Double Taxation Agreements improved its economic status?2020-02-20T09:40:18+00:00

Hong Kong has extensive network of double taxation agreements with many different countries and territories all over the world. These double taxation agreements have helped Hong Kong strengthen its position as an economic hub of the Asia-Pacific region. They have also helped to reduce existing tax barriers which have obstructed cross-border trade, investments, and the interchange of certain forms of technical knowledge and expertise between Hong Kong and the rest of the world.

How has Hong Kong’s Tax System attracted Foreign Business owners?2020-02-20T09:37:55+00:00

Foreign business owners often choose Hong Kong for the purposes of expanding their businesses in the Asia-Pacific region. Some of the reasons for this include the ease of setting up and operating a business in Hong Kong as well as its proximity to the Chinese market which offers a large base of consumers, thus increasing the demand for their goods and services. However, probably the primary factor which attract business owners to Hong Kong is its highly attractive taxation system. There are low personal and corporate tax rates with no capital gains in Hong Kong. In Hong Kong, there is also no withholding tax on interest and dividends. Thus, these tax advantages have served to draw many a foreign business owner to Hong Kong.

Articles about Corporate Tax in Hong Kong

Need tips on Hong Kong CIT? Read our insightful guides that we’ve crafted based on our years of experience.

Paul Hype Page as Your Trusted Corporate Tax Agent in Hong Kong

As your trusted tax agent in Hong Kong, we will assist you in dissecting the complex tax structure and finding a solution that works best for your company’s interests. Here are some of the benefits of engaging us as your tax agent:

Provide useful tax-related advice, guidance on the scope of tax and expenses that are available for a tax deduction, specific deductions, and double deductions

Assist in tax compliance and planning to keep you up to date with the latest regulations and interpret any changes

Reduce complexities by leaving the work to us to compute your tax based on the tax system in Hong Kong

Avoid trouble with tax planning and reduce chances of heavy penalties for issues such as tax mistakes and timeliness

Go to Top