Hong Kong Profits Tax for Sole Proprietors
Running your own business as a sole proprietor in HK? You pay profits tax — not salaries tax — at progressive rates on your assessable profits. With the right deductions, depreciation allowances, and offshore income treatment, your effective rate can be significantly lower than you think.
Sole Proprietor Tax Specialist
Running your own business as a sole proprietor in HK? You pay profits tax — not salaries tax — at progressive rates on your assessable profits. With the right deductions, depreciation allowances, and offshore income treatment, your effective rate can be significantly lower than you think.
⚠ Sole Proprietors Must File Profits Tax — Not Salaries Tax
A common mistake: sole proprietors who previously worked as employees try to file BIR60 (salaries tax) instead of BIR52 (profits tax). The two tax systems are separate. Filing the wrong form means missing legitimate business deductions and potentially being assessed incorrectly. As a sole proprietor, your "salary" from your own business is not a deductible expense — your profits are assessed in full after allowable business costs.
Are you facing these tax issues?
Business Registration Compliance
All sole proprietors must register with the Business Registration Office (BRO) within 1 month of commencing business. Non-registration is a criminal offence.
Profits Tax vs Salaries Tax
Sole proprietors pay profits tax on net business income — but can elect Personal Assessment to combine this with other income and claim additional allowances.
What Counts as Allowable Expenses
Business expenses must be "wholly and exclusively" incurred in producing profits. Mixed personal/business costs require careful allocation.
Offshore Profits Claim
Profits from services rendered entirely outside HK are exempt from HK profits tax. The IRD requires strong evidence of offshore activities.
Who This Service Is For
Professionals operating without a company structure, invoicing clients directly in their own name.
Plumbers, electricians, tutors, coaches, and other sole traders operating in HK.
Designers, photographers, writers, and artists earning project-based income.
Lawyers, accountants, and surveyors in sole practice (not partnership or company).
E-commerce, dropshippers, and online service providers without a corporate structure.
Former employees setting up on their own and needing to understand the switch from salaries to profits tax.
What We Cover
Business Registration Setup
We advise on business name registration with the BRO and IRD notifications for profits tax purposes.
Profits Tax Return Filing (BIR52)
We prepare your annual profits tax return with full profit and loss accounts.
Deductible Expense Optimisation
We identify all allowable business expenses, capital allowances, and depreciation claims.
Offshore Profits Claim
Where business activities are conducted outside HK, we prepare a documented offshore income claim.
Growth & Incorporation Planning
When profits exceed HKD 2M, we model whether incorporation into a HK company provides tax savings.
Simple, efficient, professional
Business Setup & Registration Advice
We advise on the most tax-efficient structure from day one of your business.
1 dayBookkeeping & Records Review
We review your income and expense records for the tax year and identify missing documentation.
2–3 daysProfits Computation
We prepare a tax-adjusted profits computation with all allowable deductions and capital allowances.
2–3 daysBIR52 Filing & IRD Correspondence
We file your profits tax return and respond to any IRD follow-up queries.
As requiredReal results for real clients
Independent IT consultant — HK and Singapore clients
- Annual profits HKD 980,000
- 45% of work performed in Singapore
- Offshore claim for Singapore work approved
- Assessable HK profits reduced to HKD 539,000
Freelance designer transitioning from employment
- Year 1 self-employment profits HKD 360,000
- Equipment, software, co-working space deducted
- Personal Assessment election made
- Spouse allowance and mortgage interest also claimed
Free Expert Consultation
Speak with a senior tax specialist today
- Free 30-min initial consultation
- Senior CPA assigned to your case
- No obligation — cancel anytime
Why Choose TAX.hk
Deep HK Tax Expertise
Our CPAs have 15+ years of HK tax experience and keep current with every IRD update.
Transparent Fixed Fees
No hourly billing surprises. Know your cost upfront before we start.
24-Hour Response
We respond to all enquiries within one business day. Urgent cases within 4 hours.
Strict Confidentiality
All client information is held under strict professional duty of confidentiality.
Frequently Asked Questions
Quick answers to your questions
Ready to Get Started?
Book a free consultation with a senior HK tax specialist today.
This page provides general information only. For advice specific to your situation, please consult a qualified Hong Kong tax professional.