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Profits Tax (Hong Kong)

Hong Kong Profits Tax is levied on assessable profits arising in or derived from Hong Kong. Since 2018 a two-tier regime applies: 8.25% on the first HKD 2 million of assessable profits, then 16.5% above that. Only one entity per related group can benefit from the lower 8.25% rate.

Salaries Tax (Hong Kong)

Salaries Tax is charged on income from employment, offices, and pensions arising in or derived from Hong Kong. Progressive rates of 2%, 6%, 10%, and 14% apply to net chargeable income. Tax is capped at 15% of net total income (standard rate), whichever produces the lower liability.

MPF (Mandatory Provident Fund)

The Mandatory Provident Fund is Hong Kong's compulsory retirement savings scheme, established under the Mandatory Provident Fund Schemes Ordinance. Employers and employees each contribute 5% of relevant income, capped at HKD 1,500 per month each side (based on a maximum relevant income of HKD 30,000 per month).

Business Registration Certificate (Hong Kong)

A Business Registration Certificate is required under the Business Registration Ordinance for all businesses operating in Hong Kong. Issued by the IRD, it must be obtained within 1 month of commencing business. Annual renewal costs HKD 2,000 plus a small government levy.

Companies Registry (Hong Kong)

The Companies Registry (CR) is the government body responsible for incorporating Hong Kong companies and maintaining the public register of all HK and registered non-HK companies under the Companies Ordinance (Cap. 622). Every HK private limited company must file an Annual Return (NAR1) within 42 days of its incorporation anniversary.

Offshore Income Exemption (Hong Kong)

Hong Kong taxes only profits arising in or derived from Hong Kong (territorial basis). Offshore profits are exempt from Profits Tax. The source of profits is determined by where the profit-generating activities (negotiation and conclusion of contracts) were performed. Post-2023, FSIE rules apply to passive income of large multinationals.

Yes. A proportional claim for home office costs is deductible under Section 16 of the Inland Revenue Ordinance where the home is used exclusively and regularly for business.

Yes. Employee salaries, bonuses, and employer MPF contributions (5%, capped at HKD 1,500/month) are fully deductible as business expenses under Section 16.

Yes for recurring revenue-purpose fees. Audit fees are always deductible. Legal fees for capital transactions (acquisition of assets, loan agreements for capital purchase) are capital and not deductible.

Business travel is deductible; personal travel is not. There is no IRD mileage rate. Actual cost must be claimed and documented with the business purpose.

The business-use proportion of motor vehicle costs is deductible. There is no published IRD per-kilometre rate. Capital allowances apply to the vehicle purchase price on a 30% annual reducing-value basis.

Entertainment is specifically disallowed by Section 17(1)(f) of the Inland Revenue Ordinance. Very limited exceptions apply, primarily for entertainment of overseas clients in connection with import/export trade.