Quick Answer: Hong Kong taxes the first HK$2 million of a company's profits at 8.25% and the rest at 16.5%, on profits sourced in Hong Kong only, and the 2026-27 Budget waives 100% of 2025/26 tax up to HK$3,000. Here are the rates, the filing deadlines by year-end code, and what your accountant needs.
Hong Kong profits tax is simple in structure and unforgiving on deadlines. Corporations pay 8.25% on the first HK$2 million of assessable profits and 16.5% above that, only on profits sourced in Hong Kong, and for 2025/26 the Budget waives 100% of the tax up to HK$3,000. Returns went out in April 2026 and, with a tax representative on the block extension scheme, are due between 4 May and 16 November 2026 depending on your year end. This guide covers the rates, the deadlines and what to hand your accountant. Tax representatives are listed under CPA firms and accountancy services on Portal Hong Kong.
What are the rates for 2025/26?
| Taxpayer | First HK$2 million of assessable profits | Remainder |
|---|---|---|
| Corporation | 8.25% | 16.5% |
| Unincorporated business (sole proprietor, partnership) | 7.5% | 15% |
The two-tiered regime has applied since 2018/19. Only one entity in a group of connected entities may claim the lower tier in a year, and it must elect in the return; the Inland Revenue's FAQ on the two-tiered rates sets out the connected-entity test. On top of the rates, the 2026-27 Budget measures give a one-off reduction of 100% of profits tax for 2025/26, capped at HK$3,000 per case, enacted on 22 May 2026 and applied automatically in the assessment.
What is taxed?
Profits arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong. Capital gains, dividends and most interest are outside the charge. Profits sourced offshore can be claimed as non-taxable, with contracts, correspondence and operations records to prove where the work was done; the IRD challenges weak claims and the burden is on the taxpayer. Since 1 January 2023 the foreign-sourced income exemption regime treats certain foreign passive income received in Hong Kong by multinational group members as taxable unless substance or participation conditions are met. Deductions follow the usual rule: expenses incurred in producing chargeable profits, with depreciation allowances on plant and buildings and enhanced deductions for research and development and some environmental assets.
When is the return due?
The IRD issues profits tax returns (BIR51 for corporations, BIR52 for partnerships) in April, with a nominal one-month deadline. Companies represented by a tax representative use the block extension scheme, and the 2025/26 dates, as summarised in KPMG's quick guide to 2025/26 filing, are:
| Accounting year end | Code | Paper deadline | E-filing deadline |
|---|---|---|---|
| 1 April to 30 November 2025 | N | 4 May 2026 | 4 June 2026 |
| 1 to 31 December 2025 | D | 17 August 2026 | 17 September 2026 |
| 1 January to 31 March 2026, profit cases | M | 16 November 2026 | 16 December 2026 |
| 1 January to 31 March 2026, loss cases | M | 1 February 2027 on application | 1 February 2027, no further extension |
Two things follow from the table. First, a March year end gives the longest runway and is why so many Hong Kong companies use it. Second, the audit must be finished before these dates, because the audited accounts go in with the return; see statutory audit requirements for small companies. Late returns attract penalties and estimated assessments.
What goes in the filing?
- The return itself, now increasingly e-filed through the IRD's business tax portal; e-filing is mandatory for larger corporations and earns the extra month for everyone.
- The audited financial statements and the auditor's report.
- The tax computation: accounting profit, add-backs (entertainment beyond limits, private expenses, provisions, depreciation per accounts), deductions (depreciation allowances, approved charitable donations, R&D), offshore exclusions, losses brought forward, and the two-tier split.
- Supplementary forms where applicable: two-tiered rate election, related-party transactions and transfer pricing, tax incentives, foreign-sourced income exemption disclosures.
- Employer's returns (BIR56A and IR56B) for salaries paid, due separately in April, and the annual business registration renewal.
What does an accountant do, and what should you give them?
A tax representative prepares the computation from the audited accounts, judges the offshore and deduction positions, completes and e-files the return under the block extension scheme, applies for holdover of provisional tax where profits have fallen, and answers IRD enquiries. For a simple company the fee runs HK$3,000 to HK$8,000 on top of the audit. Give them, as early as possible after year end: the audited accounts or the closed books, the fixed asset register, details of any income you believe is offshore with the supporting contracts, related-party dealings, staff costs and the employer's return, and last year's assessment and any IRD correspondence. Our guide to choosing a CPA firm covers how to pick one; the CPA listings on Portal Hong Kong are sorted by district.
How is the tax paid?
The IRD issues a notice of assessment after processing the return, with the final tax for the year just filed and provisional tax for the current year, usually payable in two instalments. If the current year's profits will be at least 10% lower than the year assessed, apply for holdover of the provisional tax at least 28 days before the due date. Overpayments are refunded after the next assessment. Keep records for seven years; the IRD can reopen a year within six years, or longer for fraud.
Frequently asked questions
- What is the profits tax rate in Hong Kong?
- For corporations, 8.25% on the first HK$2 million of assessable profits and 16.5% on the rest under the two-tiered regime; for unincorporated businesses, 7.5% and 15%. Only one company in a group of connected entities may use the lower tier. The 2026-27 Budget adds a one-off 100% reduction of 2025/26 profits tax capped at HK$3,000 per case, enacted on 22 May 2026.
- Is foreign income taxed in Hong Kong?
- Hong Kong taxes on a territorial basis: only profits arising in or derived from Hong Kong are chargeable. Profits sourced offshore can be claimed as non-taxable, but the Inland Revenue Department examines offshore claims closely and, since 2023, foreign-sourced passive income (dividends, interest, IP income, disposal gains) received in Hong Kong by multinational group entities is taxable unless economic substance or other conditions are met.
- When is the profits tax return due?
- Returns for 2025/26 were issued in April 2026. Under the block extension scheme for companies with a tax representative, the deadlines are 4 May 2026 for year-ends between 1 April and 30 November 2025 (N code), 17 August 2026 for December year-ends (D code) and 16 November 2026 for year-ends between 1 January and 31 March 2026 (M code), each with a further month for e-filing; M-code loss cases can be extended to 1 February 2027.
- What has to be filed with the return?
- For a corporation, the profits tax return (BIR51), the audited financial statements, a tax computation with supporting schedules, and where relevant supplementary forms for tax incentives, related-party transactions and the two-tiered rate election. Small corporations meeting the IRD's conditions may file without accounts but must keep them ready.
- What does an accountant do for profits tax?
- Prepares the tax computation from the audited accounts (adding back non-deductible items, claiming depreciation allowances and approved deductions), decides on offshore and other claims, completes and e-files the return under the block extension scheme, handles provisional tax and holdover applications, and answers Inland Revenue enquiries. Fees for a simple company run HK$3,000 to HK$8,000.
- What is provisional profits tax?
- The IRD charges tax for the current year in advance based on the previous year's assessed profits, payable in two instalments (usually 75% in the first quarter of the following year and 25% three months later), then adjusts it when the actual return is assessed. If this year's profits will be at least 10% lower, you can apply to hold over the provisional tax before the payment due date.
