# Sole Proprietor Tax Hong Kong 2026/27 — profits tax vs PA

Source page: https://valem.run/calculators/hong-kong/self-employed

As a Hong Kong sole proprietor you pay profits tax at 7.5% on the first $2 million of assessable profits and 15% above, or — if you elect personal assessment — the salaries-tax progressive rates after personal allowances, whichever is lower, after your own 5% MPF contribution.

**Tax year:** 2026/27

## How it is calculated

An unincorporated business pays **profits tax at two tiers**: 7.5% on the first $2 million of assessable profits and 15% on the rest. There are no personal allowances under profits tax, so on $462,000 of assessable profits the bill is $34,650.

**Personal assessment can undercut it.** An individual ordinarily resident in Hong Kong may elect to have business profits taxed at the salaries-tax progressive rates (2%, 6%, 10%, 14% on $50,000 bands, then 17%) after the personal allowances — from 2026/27 a $145,000 basic allowance, $290,000 for a married person whose spouse has no income, and $140,000 per child. On $300,000 of profit that is $8,000 instead of $21,375. The calculator works out both and takes the lower.

**Your own MPF comes first.** A self-employed person contributes 5% of relevant income between $85,200 and $360,000 a year — nothing below, $18,000 at most — and the contribution is deductible from assessable profits up to $18,000.

Only one business in a group of connected entities may use the lower 7.5% tier; the page assumes yours does. Losses, depreciation allowances and the rules on what expenses are deductible sit upstream of the profit figure you enter. Estimate, not tax advice.

## Worked example

With Annual business profit before your own MPF of 480,000 HKD, this model computes Net income / year 427,350 HKD.

## Inputs

| Name | Label | Type |
| --- | --- | --- |
| `profitsAnnual` | Annual business profit before your own MPF (HKD) | number |
| `household` | Allowance under personal assessment | string |
| `children` | Children you claim for | number |

## Sources

- [Inland Revenue Department, A Brief Guide to Hong Kong Taxes 2025/2026 — profits tax rates for unincorporated businesses (two-tiered), personal assessment, progressive rates and the $18,000 maximum MPF deduction for a sole proprietor](https://www.ird.gov.hk/eng/pdf/2026/BriefGuide20252026.pdf) (checked 2026-10-12)
- [Inland Revenue Department, 2026-27 Budget — Tax Measures (FAQ): basic, married person’s and child allowances from 2026/27](https://www.ird.gov.hk/eng/faq/budget2026_27.htm) (checked 2026-10-12)
- [MPFA, Mandatory contributions — self-employed persons: 5% of relevant income between $85,200 and $360,000 a year](https://www.mpfa.org.hk/en/mpf-system/mandatory-contributions/self-employed-persons) (checked 2026-10-12)

## What this page claims

The Valem engine reproduces this model's formula through 5 self-test cases. That shows internal consistency, not that the formula matches current law; the cited sources are the evidence for that. Estimate, not tax advice.

## For agents

- Model manifest (formula, constants, test vectors): https://valem.run/calculators/hong-kong/self-employed.json
- Compute by URL: https://valem.run/calculators/hong-kong/self-employed.json?profitsAnnual=480000
- MCP: https://valem.run/mcp/calculators (call `calculate` with calculator `hong-kong/self-employed`)