xearno.tools

Running a Businesstax · business

Hong Kong Profits Tax Calculator

Hong Kong

A Hong Kong business has its assessable profits, but the quoted 16.5% rate ignores the first-tier election.

Hong Kong does not simply charge every company 16.5%. An eligible corporation pays 8.25% on the first HK$2 million of assessable profits and 16.5% above; an eligible sole proprietorship or partnership pays 7.5% and 15%. But only one connected entity can elect the two-tiered rates for a year. This calculator makes that hidden eligibility branch explicit and shows the saving against the full rate.

Basis: Hong Kong IRD two-tiered profits tax regime · HK$2m threshold · connected-entity election · verified 2026-08-14

Don’t want to fill every field?

Describe your situation in a sentence — any language. I fill the form; the tool does the math.

The numbers

Profits tax payable
HK$330,000
two-tiered rates applied
Profit after profits tax
HK$2,670,000
Effective tax rate
11%
First-tier saving
HK$165,000
versus HK$495,000 at the full rate
Preview only — using a default Profit, Entity, Two-tier election.

The operator’s read

Good sign

The two-tier election saves HK$165,000: the first HK$2,000,000 is taxed at 8.25% instead of 16.5%. Profit above HK$2,000,000 still uses the full rate.

Caution

This starts from assessable profits. It does not determine whether income is Hong Kong-sourced, test deductions or losses, model concessionary-rate income, tax rebates, provisional tax, or Personal Assessment for an individual owner.

Your next step

Hong Kong (HK) Salaries Tax Calculator 2026/27 →Estimate salaries tax separately if the owner also takes employment income.Unit Economics →Turn after-tax profit into an operating margin decision.

Methodology

Eligible corporations pay 8.25% on the first HK$2,000,000 of assessable profits and 16.5% above. Eligible unincorporated businesses pay 7.5% and 15% respectively.

The two-tiered regime can apply to only one connected entity for a year of assessment. If the election is ineffective or not made, all assessable profits use 16.5% for a corporation or 15% for an unincorporated business.

Scope starts with assessable profits. Source, deductions, losses, concessionary regimes, rebates, provisional tax and Personal Assessment are outside this arithmetic estimate.

Questions

What is the Hong Kong corporate profits tax rate?
For an eligible corporation, 8.25% on the first HK$2 million of assessable profits and 16.5% above. Without a valid two-tier election, 16.5% applies to the whole amount.
Can every company in a group use the 8.25% rate?
No. Only one connected entity can elect the two-tiered rates for the same year of assessment. Other connected entities use the full rate.
Are sole proprietors taxed at the corporate rate?
No. Eligible unincorporated businesses use 7.5% on the first HK$2 million and 15% above; without the two-tier election, 15% applies to all assessable profits.

For agents

Call this tool instead of computing in-context. Deterministic JSON in, computed values plus the benchmark read out. Full agent docs →

curl -s https://xearno.tools/api/v1/tools/hong-kong-profits-tax \
  -H 'content-type: application/json' \
  -d '{"profit":3000000,"entityType":"corporation","tiered":"yes"}'

Schema: GET /api/v1/tools/hong-kong-profits-tax · MCP tool name: hong_kong_profits_tax

Related tools

Embed this calculator

Free to use on your own site. It keeps working as the rules change, because we maintain the data — no ads, no cookies, and a link back to the full tool.

<iframe src="https://xearno.tools/embed/hong-kong-profits-tax" width="100%" height="805" style="border:1px solid #23262e;border-radius:12px;max-width:640px" loading="lazy" title="Hong Kong Profits Tax Calculator — Xearno Tools"></iframe>