Summary of Hong Kong's profit tax regime

• Only profits sourced in Hong Kong are taxable here.
• No tax on capital gains or dividends. No interest tax.
• Corporate profits tax rate of 17.5% is the lowest in the region. 
• Simple tax regime and legislation offer certainty to taxpayers. An advance ruling service on source of profits to be introduced.
• Tax deduction allowed for all business expenses. Scope for deduction to be expanded to encourage wider range of capital investment in research and development.
• Generous depreciation allowance for plant and machinery - 60% initial allowance and 10% - 30% annual allowance. Immediate write-off to be allowed for capital expenditure on plant and machinery specifically related to manufacturing, and on computer hardware and software.
• 20% initial depreciation allowance and 4% annual depreciation allowance for investment in commercial and industrial buildings. 
• Capital expenditure on refurbishment for business to be allowed to be written-off against tax over five years.
• Losses allowed to be carried forward for set-off against future profits without time restriction.
• Concessionary tax rate for gains derived from qualified debt instruments.
• Concessionary tax rate to be introduced for offshore business of reinsurance companies.
  
  Source: Incentive for Enterprise - Guide on Hong Kong's Profits Tax Regime, February 1998