Profits tax calculator for sole proprietors

A sole proprietor pays profits tax on the business profit, after deducting your own MPF contributions of up to $18,000. For unincorporated businesses the rate is 7.5 % on the first $2 million and 15 % on the rest. You report the profit in your individual tax return.

You can also elect personal assessment. Your profit is then taxed like a salary: you deduct your MPF and allowances, and pay 2 % to 17 %, never more than the standard rate. At lower profits or with a family, personal assessment usually gives less tax. We show both and pick the lower one.

Self-employed people aged 18 to 64 pay MPF of 5 % of their profit. If your profit is below $85,200 a year you pay nothing. Above $360,000 the contribution stays at $18,000. For 2025/26 the tax is cut by up to $3,000.

• You run one unincorporated business on your own and have no other income. Profit is revenue minus allowable business expenses.
• The two-tier profits tax rate is available to one business in a group of connected entities. We assume yours is that one.
• Personal assessment adds up your income and applies salaries tax rules. We use it when it gives less tax and assume you elect it in your return.
• Self-employed MPF is 5 % of your profit between $85,200 and $360,000 a year. It is deducted from your assessable profits, up to $18,000.
• For 2025/26 the one-off reduction of up to $3,000 applies. No reduction has been announced for 2026/27.
• Losses brought forward, depreciation allowances, the extra allowance for newborns and allowances for parents aged 55 to 59 are not included.

How much tax do I pay on $600,000 of profit?

You pay $18,000 of MPF and deduct it, so profits tax for 2026/27 is 7.5 % of $582,000, which is $43,650. Personal assessment for a single person would be $56,290, so profits tax is lower. You pay $61,650 in total.

When is personal assessment better?

When your allowances are large compared with your profit. A married sole proprietor with one child and $200,000 of profit pays no tax under personal assessment in 2026/27, against $14,250 of profits tax.

Do I pay tax on profits from a business outside Hong Kong?

No. Hong Kong taxes only profits that arise in or are derived from Hong Kong. Where the profit comes from depends on where you do the work that earns it.

When do I file as a sole proprietor?

You get the individual tax return in early May and have three months to file, so until early August. Filing online gives you one more month.

• www.ird.gov.hk/eng/tax/bus_pft.htm
• www.gov.hk/en/residents/taxes/taxfiling/taxrates/salariesrates.htm
• www.ird.gov.hk/eng/tax/budget.htm
• www.gov.hk/en/residents/taxes/salaries/allowances/deductions/mpf.htm
• www.mpfa.org.hk/en/mpf-system/mandatory-contributions/self-employed-persons
• www.ird.gov.hk/eng/tax/ind_rem.htm