Hong Kong adopts a territorial source principle of taxation and has a simple and lower tax rate systems. Only profits which have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax

If you carry on a trade, profession or business in the form of a corporation, partnership business or if a non-resident person is chargeable to profits tax in your name, you must complete all items in the following profits tax returns (if applicable) to report the profits tax liability, and the tax within one month after the return issued.

The Inland Revenue (Amendment) (No. 3) Ordinance 2018 was enacted on 29 March 2018. The amendment ordinance has introduced two-tiered profits tax rates for corporations(limited) and unincorporated (unlimited) businesses by lowering the tax rate for the first $2 million of assessable profits with effect from the year of assessment 2018/19. However, for two or more connected entities, only one of them may elect the two-tiered profits tax rates.