Hong Kong: New Corporate Tax System in 2018

Chief Executive Carrie Lam announced on October 11, 2017, that a new corporate tax system will be implemented in 2018.  The new tax system will introduce the following:

• A reduced tax rate for the first HKD $2 million of profits of enterprises to 8.25% or half of the standard profits tax rate, whichever is higher. The excess in profits will remain subject to the standard tax rate of 16.5%.
• In case of group companies, the lower tax benefit will be restricted to one of the group enterprises only.
• In an effort to encourage R&D business, enterprises involved in R&D activities will be entitled to claim the first R&D expenditure at a 300% tax deduction and the subsequent R&D expenditure at a 200% tax deduction.