Hong Kong corporate tax 2026: rates, offshore rules and deadlines

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You run, or plan to run, a Hong Kong company and want to know what it will pay, when, and what "offshore" really means in 2026. This guide covers the two-tiered rates, the source rule, the filing calendar, and the newer FSIE and global minimum tax regimes that older advice misses.

Hong Kong corporate income tax in 2026: the key figures

What changed for 2026

• One-off reduction for 2025/26. Under the 2026-27 Budget tax measures, profits tax for 2025/26 is cut by 100%, capped at HKD 3,000 per business. It was gazetted on 22 May 2026 and applied automatically. No reduction has been legislated for 2026/27.
• First minimum tax filings approach. The 15% global minimum tax and the Hong Kong minimum top-up tax (HKMTT) cover fiscal years starting on or after 1 January 2025. Top-up tax notifications are due within six months of the fiscal year-end.
• Treaty network grows. Agreements with Armenia and Bahrain came into force in 2025, and Türkiye's on 30 January 2026. Check the IRD's treaty list for when each takes effect.

Is this guide for you?

Read on if you…

• own or are about to incorporate a Hong Kong company for consulting, software, e-commerce or trading;
• work from several countries and want to know whether your profits are "offshore";
• need the filing dates and provisional tax mechanics before your first return.

Probably not your case if you…

• trade as a sole proprietor (start with legal forms of business in Hong Kong);
• are the tax director of a large group needing full Pillar Two computations.

How much profits tax does a Hong Kong company pay in 2026?

Hong Kong calls its corporate income tax profits tax. The IRD profits tax page sets the two-tiered rates: 8.25% on assessable profits up to HKD 2 million, 16.5% on the part above. A company with HKD 3 million of profits pays HKD 165,000 plus HKD 165,000: HKD 330,000, an effective 11%.

The connected entities rule

If you own two companies, they are probably connected entities: one controls the other, or both are under common control. Control broadly means owning more than 50% of the shares. Per the IRD's two-tiered rates FAQ, only the entity nominated gets the lower band. An entity whose election fails pays 16.5% on all its profits.

Concessionary regimes

A company that elects into the 5% patent box cannot use the two-tiered rates. The benefit is limited by an R&D fraction, the OECD nexus approach. It suits companies that develop their own patents in Hong Kong, not resellers of licences.

From accounting profit to assessable profit

Assessable profits are accounting profits adjusted for tax. Private and capital costs are added back. Depreciation is replaced by tax allowances. Non-taxable income, such as offshore profits and most dividends, is removed. Deductions are covered in business expenses in Hong Kong.

Which profits are taxable: the source rule

Section 14 IRO charges profits tax on anyone carrying on a business in Hong Kong, on profits arising in or derived from Hong Kong. Both conditions must be met. A Hong Kong company whose profits genuinely arise abroad is not taxed on them.

Where do profits arise?

The broad question is what the company did to earn the profit, and where it did it. The IRD sets out its approach in its territorial source principle guide. In practice:

• Services. Look at where the services are performed. A consultant working from a Hong Kong desk for European clients earns Hong Kong-sourced profits.
• Trading goods. Look at where the purchase and sale contracts are negotiated and concluded.
• Evidence. An offshore claim needs contracts, emails, travel records and invoices showing where people were.

In practice, a founder who works from Hong Kong will struggle to claim offshore profits.

What changed with FSIE

The foreign-sourced income exemption (FSIE) regime started on 1 January 2023 and was widened on 1 January 2024. It taxes certain foreign-sourced passive income received in Hong Kong by an MNE entity, meaning a member of a group with entities in more than one jurisdiction. Covered: interest, dividends, IP income and disposal gains.

The income stays exempt if the entity meets an exception:

1. Economic substance (interest, dividends, non-IP gains): adequate people, premises and spending in Hong Kong.
2. Participation (dividends, equity gains): at least 5% held for 12 months before the income accrues.
3. Nexus (IP income): only the share matching qualifying R&D.

A standalone company with no foreign group member is outside FSIE. Active service or trading income is not covered either.

When and how do you file and pay?

1. Profits tax return (BIR51). Returns are issued in bulk at the start of April. Uncertified financial statements are not accepted: a company files with audited accounts and a tax computation.
2. Deadlines. Under the IRD's block extension circular for 2025/26 returns, returns for accounting years ending between 1 April and 30 November 2025 were due on 4 May 2026. For tax-represented companies, December year-ends had until 17 August 2026, and January to March year-ends until 16 November 2026. Loss cases in that last group have until 1 February 2027. Filing electronically adds one more month, except for those loss cases.
3. Assessment and payment. The IRD issues an assessment payable in instalments. It includes provisional tax for the next year, estimated from the year just assessed.
4. Holding over. If you expect profits to fall below 90% of last year's, apply to hold over provisional tax. The deadline is 28 days before the payment date, or 14 days after the notice, whichever is later.
5. Employer duties. File the employer's return (BIR56A) within one month of issue; it is normally issued on the first working day of April.

Keep records for seven years. Penalties for late or wrong returns are in tax fraud regulations of Hong Kong.

What about withholding, treaties and Pillar Two?

Withholding tax. There is none on dividends or interest. Royalties paid to a non-resident for IP used in Hong Kong are different: 30% of the payment is deemed profit, or 100% for some associates, and the payer withholds the tax. On the 16.5% rate, that is 16.5% × 30% = 4.95% of the royalty.

Treaty residence. For a certificate of resident status, a company qualifies if incorporated in Hong Kong. A company incorporated abroad qualifies if managed or controlled in Hong Kong. Here's the catch: a Hong Kong company run from your home in another country may also be resident there. See tax treaties of Hong Kong.

Global minimum tax. The IRD's global minimum tax page confirms a 15% minimum for groups with consolidated revenue of EUR 750 million or more in at least two of the four previous fiscal years. Hong Kong applies an income inclusion rule and the HKMTT; the undertaxed profits rule has no start date yet. A founder-owned company sits far below the threshold.

Common mistakes (and what they cost)

• Claiming offshore profits while working from Hong Kong → the claim fails; you pay back tax at up to 16.5%, plus additional tax for an incorrect return.
• Two of your companies both claiming the 8.25% band → only one election stands; the other company pays 16.5% on every dollar.
• Underestimating the first tax bill → provisional tax for next year comes with the first assessment, often close to doubling it.
• Managing the company from a high-tax country → that country may treat the company as resident and tax its profits at home rates.
• Filing without audited accounts → uncertified statements are rejected, so the return is late and penalties follow.

Frequently asked questions

What is the corporate tax rate in Hong Kong in 2026?

For year of assessment 2026/27, a corporation pays 8.25% on its first HKD 2 million of assessable profits and 16.5% on the balance. Unincorporated businesses pay 7.5% and 15%. Among connected entities, only the one nominated gets the lower band. Qualifying patent box profits can be taxed at 5% instead.

Is a Hong Kong company tax-free if all clients are overseas?

Not automatically. Hong Kong taxes profits by source, not by where the client sits. If you and your team do the work in Hong Kong, the profits are Hong Kong-sourced and taxable. Profits are offshore only when the activities that earn them happen outside Hong Kong, and you can prove it with records.

Does Hong Kong have withholding tax on dividends?

No. A Hong Kong company pays dividends to shareholders anywhere with no withholding tax, and there is none on interest either. Dividends are paid from profits that have already borne profits tax. The main withholding is on royalties paid to non-residents: 30% of the payment is deemed profit, giving 4.95% at the 16.5% rate.

When is the profits tax return due in Hong Kong?

Returns are issued in bulk on the first working day of April. For 2025/26, the base due date was 4 May 2026 for accounting years ending April to November 2025. Tax-represented companies with December year-ends had until 17 August 2026, and January to March year-ends until 16 November 2026. Loss cases in that last group have until 1 February 2027.

Can a Hong Kong company carry forward losses?

Yes, indefinitely, against future assessable profits. There is no carry-back, so a loss year never refunds past tax. Capital losses are not deductible. Keep your loss computations with your records: the IRD checks them when you use them.

Does the 15% global minimum tax affect small Hong Kong companies?

No. It applies only to groups with consolidated revenue of EUR 750 million or more in at least two of the four previous fiscal years. It covers fiscal years starting on or after 1 January 2025. A founder-owned company, even with foreign subsidiaries, stays on the normal 8.25% and 16.5% rates.

Related guides

• Legal forms of business in Hong Kong – company, partnership or sole proprietorship.
• Business expenses in Hong Kong – deductions and allowances that cut assessable profits.
• Tax treaties of Hong Kong – treaty residence and withholding abroad.
• Tax fraud regulations of Hong Kong – penalties for late or incorrect returns.
• Tax landscape overview of Hong Kong – every Hong Kong tax in one page.
• Corporate income tax system in Indonesia – a regional comparison.
• All country tax guides

Sources

• Profits Tax – Inland Revenue Department
• Two-tiered profits tax rates FAQ – Inland Revenue Department
• Foreign-sourced Income Exemption – Inland Revenue Department
• Global minimum tax and HKMTT – Inland Revenue Department
• Block extension circular for 2025/26 returns – Inland Revenue Department
• 2026-27 Budget – Tax Measures – Inland Revenue Department
• Patent box regime – Inland Revenue Department
• Hong Kong SAR – Withholding taxes – PwC Worldwide Tax Summaries (secondary)

This guide is general information, not personalised tax advice. See how we research and review.