Territorial profits tax: what evidence matters before the conclusion
Source of profits is a factual question. The file you keep decides the answer.
ReadStories
Tax
Territorial profits tax, offshore claims and the records behind them.
Field notes
Tax stories
Tax stories explain how Hong Kong’s territorial system works in practice — and why the records kept on day one decide what can be claimed later.
Annual return, BR and audit: three clocks that founders mix up
Three separate obligations, three separate dates, one company.
ReadOrientation
How to read the tax desk
Hong Kong’s profits tax is often summarised as “territorial” or “low”. Both are true and both are incomplete. The territorial principle is a factual test, and the two-tiered rates apply to profits that are chargeable — which depends on what the company actually did and where.
The tax desk explains how the source question is approached, what records support an answer, and when the first profits tax return arrives. It is not tax advice; a specific company should take advice from a qualified practitioner.
Desk
What this desk tracks
- Profits tax rates and the two-tiered regime.
- Offshore claims and IRD practice.
- The foreign-sourced income exemption regime.
- Record-keeping requirements.
FAQ
Questions readers ask
Is Hong Kong tax-free for offshore business?
Not automatically. Only profits arising in or derived from Hong Kong are taxed, and the source is a factual question.
What are the corporate rates?
8.25% on the first HK$2 million of assessable profits and 16.5% on the rest under the two-tiered regime.
When does the first return arrive?
Typically around 18 months after incorporation.
Is this tax advice?
No. Consult a qualified adviser for a specific company.
Sources
Primary references
- IRD — profits taxChecked 2026-11-12
- Inland Revenue Ordinance (Cap. 112)Checked 2026-11-12
- Inland Revenue DepartmentChecked 2026-11-12