Does the 2025/26 Hong Kong Profits Tax Reduction Apply to Provisional Tax? Only the Final Tax, Capped at HK$3,000
No. The 2025/26 one-off reduction applies to final tax only — it does not reduce provisional tax. The measure is a 100% reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2025/26, subject to a ceiling of $3,000 per case, and the relevant legislation was gazetted on 22 May 2026 (Inland Revenue Department, “2026-27 Budget – Tax Measures”, checked 2026-10-01). For profits tax, which is charged by reference to each business, the ceiling works per business.
What exactly does the 2025/26 measure do?
| Item | What the IRD page states |
|---|---|
| Taxes covered | Profits tax, salaries tax and tax under personal assessment |
| Year of assessment | 2025/26 only, described as a one-off reduction |
| Rate of reduction | 100% |
| Ceiling | $3,000 per case |
| Profits tax basis | Charged per business, so the ceiling applies per business |
| Legislation | Gazetted on 22 May 2026 |
Source: Inland Revenue Department, “2026-27 Budget – Tax Measures”, checked 2026-10-01.
Why is provisional tax outside the reduction?
Provisional tax is a charge made in advance of a later year of assessment and is set off against the final tax once that later year is assessed. It is therefore a different charge from the final tax of 2025/26. A reduction drafted against the 2025/26 tax charged reaches the final tax for that year; it does not cut the amount demanded on account of the following year.
The practical consequence is about timing rather than about the amount of tax you ultimately bear. Provisional tax for the following year is still payable as charged; the reduction shows up on the 2025/26 assessment, where it lowers the final tax and interacts with any provisional tax already paid for 2025/26.
How does the $3,000 ceiling work if one company runs several businesses?
Profits tax is charged per business. That is why the ceiling of $3,000 is applied per business rather than once across a group of businesses run by the same person or company — each business is a separate case for this purpose (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).
Does the reduction change the two-tier rates?
The reduction does not alter the charging rates. Since 2018/19, corporations are charged 8.25% on assessable profits up to $2,000,000 and 16.5% on any part over $2,000,000; unincorporated businesses are charged 7.5% up to $2,000,000 and 15% thereafter (IRD, “Profits Tax”, checked 2026-10-01). The one-off reduction operates on the tax charged, not on these rates.
Where connected entities exist, only the one nominated to be chargeable at the two-tiered rates gets them; the others are charged at 16.5% or 15% on all profits (IRD, “Q & A for Two-tiered Profits Tax Rates Regime”, checked 2026-10-01). That election and the 2025/26 reduction are separate questions.
Will there be a reduction for 2026/27?
The IRD page does not say. It describes the measure as a one-off reduction for the year of assessment 2025/26 and gives no indication of any equivalent measure for 2026/27 (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01). Treat any assumption about a repeat as an assumption, not as published policy.
When does the 2025/26 figure actually reach you?
- A newly registered business generally receives its first Profits Tax Return some 18 months after the date of commencement of business or the date of incorporation.
- The annual bulk issue of Profits Tax Returns takes place on the first working day of April each year.
- Returns and any required supplementary forms generally have to be filed within 1 month from the date of issue.
Source: GovHK / Inland Revenue Department, “Profits Tax Return and Supplementary Form to Profits Tax Return” (last revision date: July 2026), checked 2026-10-01.
FAQ
Does the 2025/26 reduction lower my provisional tax bill for 2026/27?
No. The reduction applies to final tax for 2025/26. Provisional tax is a separate charge made in advance of a later year and is set off against that later year’s final tax (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).
Is the HK$3,000 cap per company or per business?
For profits tax, the ceiling of $3,000 per case applies per business, because profits tax is charged by reference to each business (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).
Do sole proprietors get the same reduction?
The one-off 100% reduction covers profits tax, salaries tax and tax under personal assessment for 2025/26, subject to the same ceiling of $3,000 per case (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).
Has the reduction become law?
The relevant legislation was gazetted on 22 May 2026 (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).
Should I assume a similar reduction in 2026/27?
No. The IRD page describes the measure as one-off for 2025/26 and states nothing about 2026/27 (IRD, “2026-27 Budget – Tax Measures”, checked 2026-10-01).