Hong Kong tax for companies: 8.25%, 16.5%, and when it's 0%
A Hong Kong company pays 8.25% on its first HK$2 million of profit and 16.5% above, but only on profit that comes from Hong Kong. Profit earned entirely outside Hong Kong can be taxed at 0%, if you claim it and prove it.
There's no tax on dividends you pay out, no capital gains tax and no VAT. Every company still files a return with audited accounts every year.
Hong Kong's tax system is short, and most pages make it sound shorter than it is. The 0% everyone mentions has to be claimed and proved, the lower rate is shared between related companies, and the audit isn't optional. Here's all of it, with the Inland Revenue Department's own rules.
Key takeaways
- Profits tax is 8.25% on the first HK$2 million and 16.5% above for a company.
- Connected companies share one HK$2 million band: two companies owned by one founder get it once.
- Only Hong Kong-sourced profit is taxed. An offshore claim needs evidence; without a presence abroad, profit is likely taxable.
- The FSIE rules for foreign dividends, interest and gains apply only to companies in a multinational group.
- Hong Kong taxes no dividends, capital gains, VAT or estates.
- Every company files audited accounts. The first return arrives about 18 months after incorporation.
Hong Kong corporate tax rate: the two tiers
Hong Kong calls it profits tax. The lower rate covers the first HK$2 million, once per group of connected companies, as the IRD's two-tiered rates FAQ explains. Type a year's assessable profit.
A guide, not tax advice: assessable profit is after allowable deductions.
Connected companies share one HK$2 million band, so plan which company uses it.
Hong Kong's territorial tax: where your profit comes from
Hong Kong taxes profit that arises in Hong Kong, and nothing else. The IRD asks what the company did to earn the profit, and where it did it. Where the company is registered doesn't decide it. Its simple guide to the territorial source principle sets out the test.
- Contracts negotiated or concluded in Hong Kong, including by email or phone from Hong Kong
- Staff or directors doing the work in Hong Kong
- Goods bought and sold through a Hong Kong office
- Contracts negotiated and signed outside Hong Kong
- The people who do the work live and work abroad
- An office, staff or agents outside Hong Kong
For trading, it's all or nothing: the profit on a sale is either wholly Hong Kong-sourced or wholly offshore. It isn't split, under Practice Note 21 on the locality of profits.
The IRD looks at what earned the profit and where. Registration doesn't decide it.
Hong Kong offshore claim: could your profit be taxed at 0%?
An offshore claim is made in the tax return, with documents to back it, and the assessor can ask for full details. Four questions show how strong yours would be.
These questions follow the IRD's published approach; they aren't a ruling. The IRD publishes no figures on how often offshore claims succeed.
An offshore claim lives or dies on its paper trail. Start keeping it on day one.
Hong Kong FSIE rules: foreign dividends, interest and gains
Since 2023, foreign-sourced dividends, interest, IP income and disposal gains received in Hong Kong can be taxed. The rules reach only companies in a multinational group, of any size.
FSIE only reaches companies in a multinational group. A standalone company sits outside it.
What Hong Kong doesn't tax, and the two small exceptions
The 15% global minimum tax Hong Kong adopted in 2025 applies only to groups with EUR 750 million or more in revenue. It doesn't touch a founder's company.
Dividends, capital gains and VAT: 0%. Royalties abroad and share transfers carry small taxes.
Hong Kong salaries tax and the owner's own tax
Dividends from your Hong Kong company are untaxed in Hong Kong, as the IRD's brief guide to taxes confirms. A salary or director's fees are a different matter. The salaries tax bands for 2026/27:
| Taxable income band | Rate |
|---|---|
| First HK$50,000 | 2% |
| Next HK$50,000 | 6% |
| Next HK$50,000 | 10% |
| Next HK$50,000 | 14% |
| The rest | 17% |
Your total never goes above the standard rate: 15% of income, or 16% on the part above HK$5 million. Director's fees from a Hong Kong company are taxable in Hong Kong however few days you spend there, according to the IRD's guide for people working in Hong Kong. The basic allowance is HK$145,000 from 2026/27, in the IRD's allowance table.
Director's fees are taxed in Hong Kong however rarely you visit. Dividends aren't.
Hong Kong profits tax return: when it arrives and when it's due
A new company's first return comes about 18 months after incorporation, with three months to file it, audited accounts attached. Pick your incorporation month.
The first return comes about 18 months in, and it needs audited accounts.
Hong Kong tax questions, answered
What is the corporate tax rate in Hong Kong?
Is a Hong Kong company tax free if it does business abroad?
Does Hong Kong tax dividends?
Does every Hong Kong company need an audit?
When is the first Hong Kong tax return due?
Is there VAT in Hong Kong?
How many tax treaties does Hong Kong have?
Do you handle the tax return?
Changelog
- 10 November 2026: first published.
- 13 November 2026: official sources linked in the text.
A Hong Kong company, registered in about an hour.
US$329 plus HK$3,895 in year one, with the company secretary included.