NEWS AND RESOURCES

23 March 2018

TWO-TIERED PROFITS TAX REGIME IS IMPLEMENTED

The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) was passed by the Legislative Council on 21 March 2018. The Bill introduces the two-tiered profits tax regime (the “Two-tiered Regime”) which aims at reducing the tax burden of small and medium enterprises and start-up business. The Two-tiered Regime is applied to both corporation and unincorporated business (including sole proprietorship and partnership) and will become effective from the year of assessment 2018/19 onwards.

Currently the profits tax rates of corporation and unincorporated business are 16.5% and 15% respectively. Under the Two-tiered Regime, the rates applicable to the first HK$2 million assessable profits will become 8.25% and 7.5% respectively and the rates for the remainder are still 16.5% and 15%.

Below are some points to be noted under the Two-tiered Regime:

  1. Only an entity under a group of “connected” entities can be nominated for the Two-tiered Regime.
  2. The Two-tiered Regime is automatically applied to an entity unless it is an entity of a group of “connected” entities under which nomination is required.
  3. Entities which carry on special business such as reinsurance business, corporate treasury centre and aircraft leasing may have already enjoyed half tax rate for the profits earned, and the Two-tiered Regime will not be applied to them.

Please feel free to contact us for more detailed discussion.

 

CONTACT INFORMATION

    info@alcpa.com.hk
    (852) 2574 8289

Note that any information, publication, design, product, process, idea or know-how described in this website may be the subject of other rights, including other intellectual property rights, which are owned by ALCPA or other interested parties and are not licensed to you hereunder.  ALCPA does not warrant the website to be error-free and will not be liable for any damages whatsoever, whether in an action of contract or otherwise relating to the use of the information contained in the website.  Certain links in this website may connect you to website maintained by third parties, ALCPA has not verified the contents on these websites and will not be liable for any damages as a result of the use of these information contained in these links.