Hong Kong territorial taxation: which profits are chargeable to profits tax
Inland Revenue Department official guidance (as of August 2026)
Hong Kong taxes only profits arising in Hong Kong. The core test is where the profit-earning activities take place. Below are the key points from the Inland Revenue Department guidance.
The test
Trading follows where contracts are effected, manufacturing where goods are produced, and services where the activities are performed.
Tax on processing arrangements
Contract processing generally splits profits 50:50; import processing is fully chargeable.
Advance ruling
When uncertain, the IRD offers a paid advance ruling service.
Inland Revenue Department official guidance (as of August 2026)