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The Chief Executive mentioned in her maiden Policy Address delivered in October 2017 that a

two-tier profits tax system will be introduced in Hong Kong.

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On 29 December 2017, the Bill that seeks to implement this tax measure was gazetted. The Bill

is expected to be introduced into the Legislative Council on 10 January 2018. Once enacted,

the two-tier system will be effective from year of assessment 2018/19.

Key features of the two-tier profits tax rates:

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The key features of the proposed two-tier profits tax rates as set out in the Bill are:

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• The first HK$2 million of assessable profits of all corporations (i.e. limited company) will be subject to a reduced rate of 8.25% and the remaining amount will be subject to the normal rate of 16.5%.

   

• The first HK$2 million of assessable profits of all unincorporated businesses

  (i.e. mainly sole proprietorships and partnerships) will be subject to a reduced rate of 7.5% and the remaining amount will be subject to the normal rate of 15%.
   

• The reduced tax rates of 8.25% / 7.5% will apply to all corporations and unincorporated businesses with assessable profits irrespective of their size and industry with the exception.
  
   

Reference Links:

http://www.gld.gov.hk/egazette/pdf/20172152/es32017215230.pdf
https://www.legco.gov.hk/yr17-18/english/bills/brief/b201712292_brf.pdf

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