New tax measures and supplementary forms

Given the legislative amendments to the Inland Revenue Ordinance in 2018, including the implementation of a two-tiered profits tax rates regime, transfer pricing rules, concessionary tax deductions, and the obligation to monitor the preferential regimes pursuant to the requirements of the Organisation for Economic Co-operation and Development (OECD), certain clients are required to file supplementary forms to profits tax returns from the year of assessment 2018/19 onwards.

The two-tiered profits tax rates regime is implemented from the year of assessment 2018-19. The profits tax rate for the first HK$2 million of assessable profits of corporations and unincorporated businesses will be lowered to 8.25 per cent and 7.5 per cent respectively, while profits above that amount will continue to be subject to the respective rates of 16.5 per cent and 15 per cent.

For connected entities, the two-tiered rates will only be applicable to one entity nominated among them. Clients are required to state whether they are chargeable at the two-tiered rates, and for those who having any connected entities, they are required to provide a complete list of connected entities carrying on a trade, profession or business in Hong Kong in the specified supplementary form.