What Do the Hong Kong Tax Changes 2026 Mean for Companies?
A 15% minimum top-up tax on multinational groups is the headline among the Hong Kong 2026-27 Budget tax changes. Mandatory profits tax e-filing phases in from April 2026. Continuing rules introduced in 2023-25 — the patent box, the refined FSIE regime and the lower stock transfer duty — still shape 2026-27 planning alongside these measures. The changes affect different businesses in different ways. Multinational groups face the top-up tax and the FSIE substance tests. Local companies and startups budget on the two-tier profits tax rates and the e-filing roadmap. Enterprises commercialising R&D claim the patent box. Listed-security traders gain from the cheaper stock transfer duty. In this infographic, we outline the six changes to budget for. Key figures and dates show what matters.
What Is the Hong Kong Minimum Top-up Tax?
A 15% Hong Kong Minimum Top-up Tax applies to multinational groups with consolidated revenue of at least EUR 750 million. It applies to periods beginning on or after 1 January 2025, so it is already in force rather than a new 2026-27 Budget announcement. It implements the OECD's BEPS 2.0 Pillar Two standards. The legal basis is the Inland Revenue (Amendment) (Taxation on Specified Persons) Ordinance 2025. In-scope groups must gather jurisdiction-level data early. Liability depends on each entity's effective tax rate.
What Are the Hong Kong Profits Tax Concessions?
An 8.25% profits tax rate applies to the first HK$2 million of assessable profits, with 16.5% charged above. Recent budgets have paired these two-tier rates with one-off reductions. For 2024-25, the 100% rebate was capped at HK$1,500. The Inland Revenue Department applies it automatically in final assessments. These are continuing rates and reliefs rather than new 2026-27 Budget measures. Companies should project 2026-27 liabilities on the underlying rates rather than banking on rebates.
What Is the 5% Hong Kong Patent Box Regime?
Hong Kong's patent box regime taxes qualifying intellectual property income at a 5% concessionary rate. It applies from the year of assessment 2023/24, making it a continuing relief rather than a new 2026-27 measure. Qualifying assets include patents, plant variety rights and software protected by copyright. The benefit scales with the nexus ratio reflecting local R&D activity. Enterprises commercialising research outcomes should document development spending now to maximise the concession.
Mandatory e-Filing Roadmap
Mandatory e-filing of profits tax returns phases in from April 2026. Newly incorporated companies file first under the Inland Revenue Department's roadmap, submitting returns, financial statements and tax computations digitally in the prescribed format. Businesses should convert paper records and digitise accounting systems during 2026, because later phases will extend the requirement to existing companies.
Hong Kong 2026-27 Tax & Compliance Changes at a Glance
| Change | Key figure / rate | Effective date |
|---|---|---|
| Minimum top-up tax | 15% on MNE groups with revenue of at least EUR 750 million | Periods from 1 January 2025 |
| Profits tax concessions | 8.25% on first HK$2 million; 16.5% above | Standing two-tier rates |
| Patent box | 5% on qualifying IP income | Year of assessment 2023/24 |
| Mandatory e-filing | Profits tax returns filed digitally | From April 2026 |
| FSIE substance rules | Equity disposal gains covered | Since 1 January 2024 |
| Stock transfer duty | 0.1%; REIT transfers exempt | Since November 2023 |
| Non-compliance costs | HK$870 late annual return; HK$300 BR penalty; HK$1,200 minimum | Standing |
Refined FSIE Rules
Refined foreign-sourced income exemption (FSIE) rules, a continuing regime rather than a new 2026-27 Budget measure, cover equity disposal gains since 1 January 2024. They extend the regime applied to offshore dividends and interest since 1 January 2023. Multinational entities earning such income must show adequate economic substance in Hong Kong. They need qualified employees and operating expenditure to preserve exempt status. Substance should be documented throughout the year, not assembled after an assessment.
Capital Market Duty Changes
Stamp duty on Hong Kong stock transfers stands at 0.1% since November 2023. The rate was cut from 0.13%, and transfers of real estate investment trust (REIT) units have been fully exempt since 23 November 2023. These are background reliefs dating from late 2023, not new 2026-27 Budget measures, and they lower trading costs and deepen liquidity across Hong Kong markets. Asset managers and corporate treasuries should review transaction structures to capture savings on qualifying instruments.
Closing Compliance Note: Non-Compliance Costs
A HK$870 late fee applies to annual returns filed over 42 days late. Late business registration renewal adds a HK$300 penalty, while late profits tax returns attract a minimum HK$1,200 penalty under the Inland Revenue Ordinance. Failed FSIE substance tests can forfeit exemptions retrospectively. We help clients build a compliance calendar covering the Hong Kong tax changes 2026 — get in touch today.
Ready to Act on the 2026-27 Tax Changes?
3E Accounting Hong Kong helps companies implement every change in this infographic, from top-up tax data to e-filing readiness.
Frequently Asked Questions
It is a 15% top-up tax on multinational groups with consolidated revenue of at least EUR 750 million, in force for accounting periods beginning on or after 1 January 2025.
The two-tier rates remain 8.25% on the first HK$2 million of assessable profits and 16.5% above, with any one-off budget reduction applied automatically by the Inland Revenue Department.
Qualifying intellectual property income is taxed at a concessionary 5% rate from the year of assessment 2023/24, with the benefit scaled by the nexus ratio reflecting local R&D activity.
Mandatory e-filing phases in from April 2026, beginning with newly incorporated companies; later phases will extend the requirement to existing businesses.
Multinational entities receiving offshore dividends, interest or equity disposal gains must maintain adequate employees and operating expenditure in Hong Kong, or the income becomes chargeable.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
