跨境税务台

A sole proprietorship business is reported in Part 5 of the individual tax return (BIR60), and where the business's gross income does not exceed HK$2,000,000 you are not required to attach any financial statements to that return, according to the Inland Revenue Department's "Tax Reporting for Profits Tax (Sole Proprietorship & Partnership)" page (checked 2026-10-01). The relief is narrow: it removes the attachment, not the underlying records. The same page states that accounts must still be kept.

Where is a sole proprietorship reported on the BIR60?

In Part 5. The reporting route is the individual tax return rather than a separate business return, which is why the sole proprietorship's figures sit alongside the rest of the individual's return. The Inland Revenue Department describes the arrangement on its sole proprietorship and partnership reporting page, without displaying a publication or revision date on that page (checked 2026-10-01).

What does the HK$2,000,000 threshold actually remove?

Only the obligation to attach financial statements to the return. Two consequences follow from how the department words it:

Question Answer Source
Must financial statements be attached? No, so long as gross income of the sole proprietorship business does not exceed HK$2,000,000 IRD, Tax Reporting for Profits Tax (Sole Proprietorship & Partnership), checked 2026-10-01
Must accounts still be kept? Yes Same source, checked 2026-10-01
Is the threshold measured on profit? The reporting rule is stated by reference to gross income Same source, checked 2026-10-01

Because the threshold is expressed as gross income, a business with high turnover and low profit does not fall under the concession on the strength of its profit figure alone.

Is this the same HK$2,000,000 as in the two-tiered profits tax rates?

No — the two figures are computed on different bases. The two-tiered rates apply to assessable profits, not gross income (Inland Revenue Department, Profits Tax page, checked 2026-10-01):

Entity First HK$2,000,000 of assessable profits Assessable profits above HK$2,000,000 Standard rate
Unincorporated business (sole proprietorship, partnership) 7.5% 15% 15%
Corporation 8.25% 16.5% 16.5%

The two-tiered regime has applied from the 2018/19 year of assessment. A sole proprietorship is taxed in the unincorporated column; an incorporated company is taxed in the corporate column. That rate difference is the only company contrast supported by the material available here — it does not extend to what supporting documents a company must file.

If I own more than one sole proprietorship, do both get the two-tiered rates?

No. Where a natural person owns two or more sole proprietorship businesses, each business is treated as a separate entity, but the two-tiered rates are restricted to only one of them — the one that has made the election (Inland Revenue Department, Q&A for Two-tiered Profits Tax Rates Regime, checked 2026-10-01). The same Q&A sets out the wider connected-entity rule: where an entity has one or more connected entities at the end of the basis period, the two-tiered rates apply only to the entity nominated to be charged at those rates, and the rest are charged at 16.5% or 15% on all profits.

When does the return arrive, and how long do you have to file?

For the profits tax side, 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 (GovHK / Inland Revenue Department, page last revised July 2026, checked 2026-10-01). The annual bulk issue of Profits Tax Returns takes place on the first working day of April each year, and returns together with any required supplementary forms should generally be filed within 1 month from the date of issue (same source).

Does the 2025/26 one-off tax reduction change the filing position?

It reduces the tax, not the paperwork. For the year of assessment 2025/26, profits tax, salaries tax and tax under personal assessment are reduced by 100%, subject to a ceiling of HK$3,000 per case; profits tax is counted per business (Inland Revenue Department, 2026-27 Budget – Tax Measures, checked 2026-10-01). The relevant legislation was gazetted on 22 May 2026. The reduction applies to final tax only, not to provisional tax. The department's page does not say whether any similar measure applies for 2026/27.

FAQ

Do I need to attach financial statements if gross income is exactly HK$2,000,000?

No. The department's wording is that the concession applies so long as gross income does not exceed HK$2,000,000, which covers income at that level (IRD, checked 2026-10-01).

Do I still need to keep accounts if no financial statements are attached?

Yes. The reporting page states the accounts must still be kept (IRD, checked 2026-10-01). The threshold removes an attachment requirement, not the record-keeping obligation.

Can I use the two-tiered rates on two sole proprietorships I own?

Only on one. Where one person owns two or more sole proprietorship businesses, the two-tiered rates apply to only one of them — the business that has made the election (IRD two-tiered Q&A, checked 2026-10-01).

What rate applies to a sole proprietorship's profits above HK$2,000,000?

15% on any part of assessable profits over HK$2,000,000, with 7.5% on the first HK$2,000,000; 15% is also the standard rate for unincorporated businesses (IRD, Profits Tax page, checked 2026-10-01).

Does the 2025/26 reduction apply to provisional tax?

No. The measure applies to final tax only, and is subject to a HK$3,000 ceiling per case, with profits tax counted per business (IRD, 2026-27 Budget – Tax Measures, checked 2026-10-01).

Sources