HK Freelance
Tax Calculator 2025/26

How HK Profits Tax works for freelancers

If you are a freelancer, consultant, or sole proprietor in Hong Kong, you pay Profits Tax on your assessable profits — not your gross income. This means your deductible business expenses reduce your tax bill significantly.

The two-tier rate system

Since 2018/19, Hong Kong uses a two-tier Profits Tax rate for unincorporated businesses (sole proprietors and partnerships):

• 8.25% on the first HK$2,000,000 of assessable profits
• 16.5% on any profits above HK$2,000,000

Note: Many online tools incorrectly show a flat 17% rate. This is wrong. The correct maximum rate for a sole proprietor in HK is 15% on the standard rate assessment, but the two-tier system above almost always applies and results in a lower bill.

What counts as deductible expenses?

• Software subscriptions (Figma, Adobe, etc.) — 100% deductible
• Hardware and equipment (laptop, camera) — 100% deductible
• Office rent or co-working space — 100% deductible
• Home office (partial use) — typically 20-30% deductible
• Client meals and entertainment — 50% deductible
• Professional services (accountant, legal) — 100% deductible
• Phone and internet (business use portion) — typically 50-70% deductible
• MPF contributions — 100% deductible (up to HK$18,000/year)
• Business travel — 100% deductible
• Training and courses — 100% deductible

Provisional Tax — the IRD surprise most freelancers dread

Unlike employees, freelancers in HK receive a provisional tax demand each August. This requires paying:

• Your final tax bill for the previous year
• A provisional tax advance for the current year (based on estimated profits)

This can result in a combined bill of 1.5-2x your expected tax amount arriving at once. The solution is to set aside the correct amount every single month — which is exactly what Flo HK helps you do.

MPF — Mandatory Provident Fund

As a self-employed person in HK, you must contribute 5% of your relevant income to MPF, capped at HK$1,500 per month (HK$18,000 per year). These contributions are fully deductible from your Profits Tax assessable income — making MPF one of the most valuable tax deductions available.

Frequently asked questions

Do I need to register for Profits Tax as a freelancer?

Yes. If you earn income from a trade, profession, or business in HK, you must notify the IRD within 4 months of commencement and file a Profits Tax return annually.

What is the filing deadline for Profits Tax?

Individual Profits Tax returns for FY2025/26 are typically due June 2027. The IRD can grant extensions. Your first provisional tax bill usually arrives in August 2026.

Should I incorporate as a limited company?

At lower income levels (below HK$2M profits), the sole proprietor rate (8.25%) is the same as the corporate rate. Incorporation only makes sense for liability protection, client requirements, or profit splitting — not purely for tax savings at typical freelancer income levels.