Hong Kong: Two-tiered profits tax regime introduced | KPMG | GLOBAL
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Hong Kong: Two-tiered profits tax regime introduced

Hong Kong: Two-tiered profits tax regime introduced

A new two-tiered profits tax rate regime was introduced in Hong Kong on 29 December 2017 when a “profits tax bill” was gazetted. The key objective of the profits tax bill is to maintain a competitive taxation system to promote economic development while maintaining a simple and low tax rate regime.

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The two-tiered profits tax regime would:

  • Reduce the overall tax burden on enterprises, especially for small and medium-size enterprises (SMEs)
  • Allow enterprises to reinvest the tax savings in upgrading hardware and software to boost their overall operations and efficiency
  • Enable more successful social enterprises to pursue their social objectives (e.g., creating more employment and training opportunities for the socially disadvantaged) by alleviating their tax burden
  • Boost Hong Kong’s status as a preferred investment jurisdiction

The two-tiered profits tax regime would apply to both corporations and unincorporated businesses beginning from the year of assessment 2018/2019 (i.e., on or after 1 April 2018).

 

Read a January 2018 report prepared by the KPMG member firm in Hong Kong

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