IMPLEMENTATION OF TWO - TIERED RATES OF PROFIT TAX:

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Since 1st April 2018, the Government of the Hong Kong Special Administrative Region has launched a new regime of Two-Tiered Rates of profits tax which will reduce the tax burden by approximately 50%.

 

Under the new tax regime, the rate of the profits tax for the first HK$2 million (thereafter “the Threshold”) of assessable profits of corporations arising in or deriving from Hong Kong will be reduced to 8.25% while the amount above the Threshold will be charged at the current rate of 16.5%.

 

 The Two-Tiered profits tax rates regime will benefit eligible enterprises with assessable profits, irrespective of their size. To ensure that the tax benefits will target small and medium enterprises (SMEs), the application of the two-tiered rates is restricted to only one enterprise nominated among connected entities. 

 

According to the Government of the Hong Kong Special Administrative Region, the new tax regime will promote economic development of Hong Kong as an international financial centre, particularly it will provide assistance to SMEs and Start-up by means of reducing their tax burdens.