Two-tier profits tax and connected entities: can every company use 8.25%
This page is based on public information as of 2026-10-06 (IRD profits tax page and two-tier FAQ).
No. Among companies under the same control, the two-tier rates apply only to the one entity that is nominated. Every other connected entity is charged at the standard rate on all of its assessable profits.
Rates
Corporation: 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder. Unincorporated business: 7.5% on the first HK$2 million and 15% on the remainder. The standard rates are 16.5% for a corporation and 15% for an unincorporated business.
| Item | Who it is for | Nature of eligibility | Legislative stage | As of |
|---|---|---|---|---|
| Item Two-tier profits tax (corporation: 8.25% on the first HK$2 million, then 16.5%) | Who it is for The one nominated entity | Nature of eligibility Automatic if the conditions are met | Legislative stage Enacted and in force | As of 2026-10-06 |
Connected entities
The two-tier rates apply only to the one nominated entity. Two entities are connected if one controls the other, or if both are controlled by the same entity. Control means directly or indirectly holding or controlling more than 50% of the issued share capital or voting rights, or being entitled to more than 50% of the capital or profits.
Where there are connected entities and one is not nominated, the entire assessable profits are charged at 16.5% (15% for an unincorporated business). It is not the case that each company gets its own band of 8.25%.
BUD uses another standard for a related enterprise (30% or more of the shares and the same nature of business). The two are not the same test. See BUD Fund and E-commerce Easy.
This page sits under Tax in the service catalog.
This page is based on public information as of 2026-10-06 (IRD profits tax page and two-tier FAQ).