Answers to common Hong Kong business questions

Profits tax

• What is the two-tiered profits tax rate in Hong Kong?

  Under the two-tiered regime, a corporation pays profits tax at 8.25% on the first HK$2,000,000 of assessable profits and 16.5% on the rest, while an unincorporated business such as a partnership or sole proprietorship pays 7.5% and 15%.

• Who can elect two-tiered profits tax if you have connected entities?

  If your business has one or more connected entities at the end of its basis period, only one entity in that group can elect the two-tiered profits tax rates for the year of assessment.

• What is the profits tax return deadline in 2026 for N, D and M codes?

  A Profits Tax Return is due within 1 month of its issue date.

• How do I apply for a profits tax return extension?

  Most extensions come through a tax representative.

• What is provisional profits tax?

  Provisional profits tax is an advance payment towards next year's profits tax.

• How do I apply to hold over provisional tax?

  Apply in writing on Form IR1121, or online through the eTAX Individual Tax Portal where it covers your income, and state your ground.

• What is a tax reserve certificate?

  A tax reserve certificate is part of a save-for-tax scheme run by the Inland Revenue Department to help taxpayers build up money for their tax bills.

• BIR51 or BIR52: which profits tax return form do I use?

  BIR51 is the Profits Tax Return for corporations, and BIR52 is the Profits Tax Return for persons other than corporations, which in practice means partnership businesses.

• How do I fill in a sole proprietor tax return (BIR60)?

  A sole proprietor reports business profits in Part 5 of the Tax Return, Individuals (BIR60), not on a separate profits tax return.

• Is profits tax e-filing mandatory in Hong Kong?

  No, not for most businesses yet.